Updated: Jul 7, 2025
Commodity Price Volatility: A Global Risk of Financial Accidents
Recent examples of significant setbacks due to commodity price fluctuations include:
- In the corporate world, Gamesa reported a €300+ million loss in Q2 2022 [1];
- In the project world, cost overruns for the HS2 high-speed line (United Kingdom) have been estimated at £10 billion [2].
More than 7 in 10 companies see commodity price variability as a material risk, but less than 40% of them report having an associated hedging policy [3].
Am I affected? A more prevalent risk than you think
Both revenues and costs can be impacted by market prices, and only the net exposure should be managed.
This analysis requires a detailed understanding of all operations that can create commodity price exposure, and all relevant stakeholders should be aware of the issue, including:
- procurement
- project developers
- investment managers
- finance
- …
ESTER helps you dig into the topic!
In a few episodes, we answer the questions you have (or should have!) about commodity risk:
- How can you efficiently hedge when there is explicit risk through indexations?
- What are the risks when there is no indexation?
- What is specific about commodities for risk quantification and derivatives hedging?
- What to focus on when you first execute a commodity hedge and throughout its lifecycle?
