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1. http://www.garp.org/#!/risk-intelligence/detail/a1Z40000003Kt7O
2.Overall, there are four distinct approaches to commodity risk management:
1. Federated Risk Management.
A decentralized model where risk management is handled at the local level. The focus is to transfer and avoid risk by getting into fixed price contracts.
2. Enterprise Risk Management (ERM).
A centralized approach to risk management wherein a company has aggregated views of risks across all businesses and will consider applying hedge accounting to transfer risk.
3. Best Margin Risk Management.
An approach involving hedging a portion of input exposure, but with more active management of positions and with greater use of complex techniques. This approach comes with a higher cost and more potential exposure to risk.
4. Trading Risk Management.
This strategy may include speculative positions that require daily monitoring, using a well-defined framework of controls. Companies employing this approach have a fundamental view of the market, stemming from, e.g., their leading roles in physical sourcing and their relatively mature trading and risk management systems.
3. I learnt how to identify the commodity risk.
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