Energy price risk occurs when changes in energy inputs cannot be recouped in the price of your finished product. To manage this risk you must know:
- How much risk can my company handle?
- How are energy price changes reflected in your finished product price?
- What is the historic volatility of the commodities you buy?
Once you know your risk tolerance and the volatility of the energy you buy, strategies to manage that risk can be implemented.
Before you can improve, you have to know where you stand. And there’s only one way to see the results of your current processes: You must measure.
Beeson & Associates, Inc., takes a hard look at your business across a range of functions, including policy, personnel, strategy, controls, tools, business integration, cash management and market outlook. We rate them on a 1-10 scale, then show you how you compare to the industry at large. This is the first step to providing you with the concrete tools you need to manage your energy risk.
Establishing Risk Tolerance
Energy markets have grown increasingly volatile, which means that if your coverage and pricing horizon are at odds, your company may be at extreme risk. Unfortunately, many companies do not fully understand the energy risk that exists in their businesses—and most do not have a clearly defined risk tolerance.
Through extensive surveying and analysis, Beeson & Associates, Inc., will help you find your own comfort zone and communicate that understanding throughout your organization. We’ll analyze your policies and help get all of your departments on the same page. And once you understand the true risks of your energy positions and the level of risk you can tolerate, we’ll build a fully customized solution, based on your unique circumstances, to help you establish that perfect balance.
You’re not in business to make money speculating. You just need to manage your costs. So why take chances? Understanding how much risk you can accept, then acting accordingly, is key to your overall success, and truly the question you must answer for yourself. Beeson & Associates, Inc. can help you do just that.
Policies are critical to managing energy risk because they’re your roadmap. Beeson & Associates, Inc. provides the framework to ensure that the risk management plans you’ve put in place reflect your values and are being followed.
We help you identify what guides your decision-making processes. We also find your blind spots. We’ll push you to establish your own risk tolerance, and teach you the steps necessary to manage risks within these tolerances.
To learn more about Beeson & Associates’ approach to risk management, contact us today.