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Now more than ever, agribusinesses need to develop a more structured, holistic approach to managing risk and liquidity.
Using our proprietary High Performance Business methodology, Accenture recently analyzed 56 agribusiness companies with annual revenues in excess of US$1 billion to determine key characteristics of high performers. The research revealed that one of the four distinctive capabilities of high performing agribusiness companies was effective trading and risk management. High performers effectively manage physical, financial and sustainability risk, as well as their revenue.
Accenture research indicates that managing financial risk together with physical risk is essential to achieving high performance.
As global economic volatility continues to cause huge swings in commodity and resource prices as well as packaging and transportation costs, financial risk poses a growing threat to agribusiness companies.
While many companies are addressing physical risks associated with their supply chains or producers to ensure product quality and safety, financial risk—whether credit, market or liquidity risk—is often handled separately, despite there being an important connection to physical risk.
In an increasingly volatile market, having a robust, integrated commodity trading risk management capability won’t be optional—it will be essential. With it, companies will be better able to react to existing risks and prepare for future ones, whether it means developing more stringent reporting requirements to meet new derivatives trading legislation or planning for yield or price volatility.
Companies can use commodity trading risk management as a mechanism to protect their capital and liquidity but also transform their business by identifying new opportunities and strategies that can increase efficiency and spur revenue growth.
Latin America/Global LeadEduardo Barros+55 11 9281 email@example.com
North AmericaDarryl Heath+1 firstname.lastname@example.org
Europe and AfricaRob van der Krogt+31 20 593 email@example.com
AsiaBruce Liang+65 6410 firstname.lastname@example.org
April 9, 2012
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