London, August 2010

The Physical Factor and Operational Risk Management: Businesses that either trade, buy or sell commodities must routinely deal with the inherent uncertainty in commodity markets. However, in recent months and years, they have also had to deal with both global and national economic issues and with the increasing likelihood of regulation changes.

Risk is pervasive and it should and must be actively managed. Such risks affect all companies that trade commodities; whether they are producers, buyers, exporters, banks, funds or other types of company such as various forms of end users, for example, airlines and transportation companies.

In a recent study of the business issues facing commodity traders, CommodityPoint found that risk management was indeed the top ranked area of immediate concern. Closer inspection of the other business issues cited by the respondents to the study showed that many of them were also related to the management of various risks. Risk is simply endemic in trading operations and, under current financial and market conditions, those risks have become even more elevated than before.

Of all the areas of risk that needs to be managed, operational risks are often the most difficult and most neglected from a commercial software perspective. Operational risk includes a number of areas that are almost all related to either the trading of physical commodities or to the management of the trading and risk business function such as, for example, transportation management and scheduling, tracking weights and costs, delivery updates and impacts on position management, documentation, counterparty and credit risk, invoicing, cashflow planning as well as or errors and omissions.

Ends--

"In Search of Total Risk Management—The Physical Factor and Operational Risk Management." To view the entire White Paper go to www.utilipoint.com/reports/Whitepapers.asp