Risk Management


What is Risk Management

The term ‘Risk Management’ refers to a variety of business processes aimed at protecting the company’s value, and increasing it, for the benefit of all its stakeholders.

More specifically, risk management involves a series of systematic activities aimed at identifying, measuring, evaluating, and treating risks. It allows the understanding, assessment, guidance and control of all the processes of an organization (or its operational area), shaping the appropriate countermeasures to absorb the criticalities inherent in multiple scenarios that could compromise the achievement of business objectives.


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Why Risk Management is important for commodity markets

In the current economic environment, there are several risk factors related to raw materials that companies must be able to anticipate and monitor, such as:

  • The constant demand for procurement efficiency;
  • The volatility of raw material prices;
  • The commitment to purchase volumes without commitment for specific periods;
  • The request for price updates of raw materials in case of movements exceeding 10%.

Risk management for raw materials helps companies develop strategies to manage their exposure to purchase prices related to supply chain management.


Manage commodity supply chain risks with the FARO Club methodology

FARO Club is a hub of skills, experience and sharing of information, scenarios and risk management techniques.

It has developed a methodology for risk management related to commodity prices, to provide companies with useful educational and informative tools to make quick and preventive decisions to protect their business, thanks to the capability to elaborate scenarios with objective data, effective and consolidated methods.



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