Topic
Risk management is the bridge between market reality and internal accountability. A hedge is not a bet —
it’s a way to define what “acceptable outcomes” look like for budgets and operations.
A simple goal: fewer surprises, clearer decisions, better follow-through.
Three layers of risk
Price risk
Market moves change cost. Your contract and hedge structure decide how much of that you carry.
Volume & profile risk
Mismatch between expected and actual demand can create costs even when “the price” is fixed.
Governance risk
Unclear roles and weak reporting often create bigger losses than markets do.
Common mistakes
- Measuring success as “did we beat the market?” instead of “did we stay within risk limits?”
- Hedging without a documented governance model (approvals, limits, reporting cadence).
- Ignoring volume/profile risk while optimizing only the price component.
- Reporting too late: the first time management sees exposure is after settlement.
Next step
If you’re starting from scratch, begin with contract structure — it defines where risk sits.