Using hedging tools to mitigate commodity price risk

摘要

Risk as an uncertain consequence is an undesirable event that could or could not happen.Risk management is denned as an integrated process of identifying the risk through recognising and describing,carrying out an ongoing assessment and planning what to do to deal with risks to an acceptable level in a company.Financial risk can be expressed as a negative impact on a company's income due to direct or indirect negative effects on input and output prices.Financial risk management is the process of recognition and management of the financial risks,which a company might be exposed.In the case of a highly integrated and globalised economic environment,financial risk management for a company is more vital than before.There are three categories of financial risks:Interest rate risk,foreign exchange risk and commodity price risk.