Find out why an effective risk management strategy requires the development of robust economic forecasting tools that simulate future cash flows. One such tool uses “real-option” theory to model flexibility associated with energy assets.
Lending in commodity sectors has always been a risky business, but since the 1980 energy deregulation, market volatility has increased. Borrowers who fail to create effective risk management plans can create headaches for their lenders. John Echols and Greg Crowley make a case for effective commodity risk management.