Volume risk
Volume risk is a commodity risk which refers to the fact that a player in the commodity market has uncertain quantities of consumption or sourcing, i.e. production of the respective commodity.[1] Examples of other circumstances which can cause large deviations from a volume forecast are weather (e.g. temperature-changes for gas consumption), the plant-availability, the collective customer outrage, but also regulatory interventions.
Example
An electricity retailer cannot accurately predict the demand of all house holds for a given time which is why the producer cannot forecast the precise time that a power plant will provide more electricity that consumed, even if the plant always delivers the same output of energy.
See also
References
- Kandl, Peter; Studer, Gerold (January 2001). "Factoring in volume risk". Risk Magazine: 84f. Retrieved 23 October 2015.
External links
- Pellegrino, R.; Tauro, D. (March 27, 2018). "Supply Chain Finance: A supply chain-oriented perspective to mitigate commodity risk and pricing volatility (in press)". Journal of Purchasing and Supply Management. doi:10.1016/j.pursup.2018.03.004. S2CID 169679135. (URL retrieved on Science Direct)
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