Q. Why should I use risk management as a business strategy?
A. One of the primary objectives of risk management is to reduce price volatility and lock in margins. This, in turn, helps you gain competitive advantage and focus on other business priorities.
Q. Who can benefit from managing commodity price risk with IRMP?
A. Any organization with exposure to fluctuating commodity prices can potentially benefit from the IRMP. Our consultants currently work with producers, distributors, manufacturers, processors, wholesalers, retailers, importers, and exporters – in short, any company that is reliant on, and vulnerable to price volatility in, commodities.
Q. Does using the Integrated Risk Management Program require me to change who supplies my actual product?
A. No. You can maintain the purchasing relationships you have with your current suppliers. The INTL FCStone program is a financial strategy that allows you to mitigate the risk of price fluctuations, not a commodity-sourcing or logistics program.
Q. How do foreign exchange rates affect the Integrated Risk Management Program?
A. Whether you’re exposed to the Canadian dollar, the Euro, or any other currency, INTL FCStone can develop a plan that allows you to manage your risks. Foreign exchange is an area of expertise at INTL FCStone, and one of the many services we offer as part of the IRMP program.
Q. Are my competitors using programs similar to the INTL FCStone IRMP?
A. Yes, many of your toughest competitors are actively managing their commodity price risk. We can provide you with the expertise and knowledge required to level the playing field and help your business be more competitive than ever.
Q. What happens if I don’t manage my commodity price risks?
A. There are several things that happen to businesses that do not manage these risks, including, but not limited to, loss of competitiveness, missed opportunities for improved margins, and inefficient utilization of assets.
Most important, if you do not manage your risks, you are, in effect, speculating. In addition, for publicly held companies, there is the difficulty of explaining unmanaged commodity costs to shareholders.
The IRMP is a conservative and time-tested business strategy. We consider it a fiduciary responsibility for businesses to proactively manage commodity price fluctuations.
Q. How does the IRMP work and how does INTL FCStone manage these risks?
A. The INTL FCStone consultant collects historical data on your specific commodity and conducts an in-depth analysis of the current and projected global supply-and-demand situation. INTL FCStone will develop a comprehensive strategy to manage the risks we identify, as well as make ongoing recommendations for the use of standardized or customized risk-management tools to help you meet your objectives.
In addition, INTL Hanley LLC is a pioneer in the development and application of OTC tools for commodities, and with FCStone, LLC acting as a Futures Commission Merchant (FCM) on all major commodity exchanges in North America, we understand how to put that knowledge to use in creating effective risk management programs for producers and users of a wide variety of commodities.
Q. Is the Integrated Risk Management Program difficult to manage or time-consuming?
A. No. One of the benefits of engaging an INTL FCStone consultant for an IRMP is that much of the risk management work is done for you, allowing you to focus on other priorities. You don’t need to be concerned with day-to-day market analysis; the INTL FCStone consultant will do that for you. At all stages of the process, we will execute programs only upon your approval.
Q. Am I taking on more risk with the Integrated Risk Management Program?
A. Risk Management is a process in which financial instruments such as futures, options, over-the-counter products, and swaps are used to reduce exposrue to volatile prices. While all commodity trading involves risks, the INTL FCStone IRMP is focused on minimizing your exposure. Indeed, failing to take action to limit your commodity risk and allowing the market to dictate your price exposure is itself a risky and speculative position.
Q. Why should I work with INTL FCStone?
A. INTL FCStone is an independent third party who sits on your side of the desk and becomes a single source for all your commodity risk-management needs. Working with us allows you to have, in effect, your own risk-management department, with access to the latest tools and techniques. In the process, your goals become our goals: protecting your budgets, predicting and stabilizing prices, and securing margins. In short, the IRMP is smart business.
Q. What other risk management services does INTL FCStone provide?
A. We view risk management from a holistic perspective and work in all of the major commodities. In addition to our extensive experience in all of the agricultural markets, we also have an in-depth understanding of the global foreign exchange and energy markets. For example, our Fuel Surcharge Management Program is designed to protect shipping budgets and stabilize transportation costs. Whatever your commodity needs, your INTL FCStone Consultant can evaluate and manage these needs as part of the IRMP.
Q. How long do IRMP customers stay with INTL FCStone?
A. We have many retainer clients who have been using the IRMP successfully for more than 20 years. For these companies, the IRMP is an integral part of their day-to-day operations because, over time, they’ve seen its positive impact on profitability. We would be happy to provide references from our customers upon request.
Q. How can I learn more about how the commodity markets work and the tools that INTL FCStone uses to protect against market volatility?
A. INTL FCStone offers a series of educational seminars on commodity risk management that are complimentary to IRMP customers. A complete list of current educational seminars is available at www.intlfcstone.com/seminars/.
Q. How do I get started?
A. It’s easy: Just contact us and tell us your needs. We will have one of our consultants contact you to tell you how we can help you improve your bottom-line results.