Exposure to risk – market, financial and operational – is inherent in commodities trading and transportation, making strong risk management essential to financial and operational stability. Caravel’s professional risk management team actively monitors, measures, manages and optimizes operational, market and credit risks across our global business through a wide range of metrics and techniques including the latest trading and risk management technology. Where required we offer our services for price risk management as well as structured finance – for the long-term benefit of all parties in the supply chain.
Risk measurement and management is integrated into all our operations and is part of our corporate culture. Owing to the multi-disciplinary nature of the Group as a whole, we have unique intelligence and insight which allows us to identify and execute transformative transaction opportunities. These support the Group – particularly in terms of managing financial risks and achieving synergy across the business as a whole.
Price risk management
Risk control is overseen at the highest level of the Group’s management, and kept strictly separated from front office functions. Our robust risk control process spans the entire life cycle of risk from inception to settlement, across all levels – corporate, portfolio and trading.
We use a variety of risk management tools and metrics, such as position limits, market depth, concentration and liquidity measurements. Value at Risk (VaR) – a commonly utilized tool in our industry – is used to measure, manage and allocate risk across our business, with individual sub-limits being set and enforced by senior management. We also generate stress and worst-case scenario metrics.
Operational risk management
Our business structure gives us control of a wide spectrum of the supply chain, since the commodities in which we trade are commonly transported in vessels under our own management. Consequently we are able to exercise strict management of the risks associated with transportation. Our shipping and cargo management activities are conducted with reference to the highest standards of quality, environmental impact, and health and safety, minimizing the risks involved. Measurement and management of risk is integrated into all our operational processes.