In commodity and financial markets rife with volatility, having a robust hedging strategy is crucial for protecting profitability. Al Banyan Tree designs tailor-made hedging programs that help clients manage price risks in raw materials, currencies, and interest rates as needed. We start by thoroughly quantifying your exposure – whether it’s a metals producer facing fluctuating ore prices or a manufacturer dealing with foreign exchange swings on imports. Using our proprietary risk models (including copula-based simulations for extreme events and Value-at-Risk analysis), we identify the potential impact of adverse market moves on your cash flows and margins. This analytical foundation allows us to craft hedging solutions that mitigate downside risk while preserving upside where possible. Our approach balances financial hedges (like futures, forwards, swaps, and options) with any natural offsets in your business, aiming for cost-effective risk reduction.
We help determine optimal hedge ratios – for example, what percentage of next year’s oil requirements an airline should hedge, or how much of a mining company’s output should be price-locked. Scenario analysis is used to test these strategies against extreme market conditions (such as oil price crashes or metal price spikes), ensuring they hold up under stress. Al Banyan Tree also emphasizes hedge governance and flexibility: we establish clear policies (when to hedge, how to adjust positions, etc.) and incorporate trigger-based adjustments as market conditions change. The result is a dynamic hedging strategy that instills confidence in stakeholders by stabilizing earnings and shielding your business from commodity and market volatility. We effectively become your partners in risk management – monitoring markets in real-time and ready to refine the strategy as needed, so you can focus on your core operations knowing your downside is protected.
We help determine optimal hedge ratios – for example, what percentage of next year’s oil requirements an airline should hedge, or how much of a mining company’s output should be price-locked. Scenario analysis is used to test these strategies against extreme market conditions (such as oil price crashes or metal price spikes), ensuring they hold up under stress. Al Banyan Tree also emphasizes hedge governance and flexibility: we establish clear policies (when to hedge, how to adjust positions, etc.) and incorporate trigger-based adjustments as market conditions change. The result is a dynamic hedging strategy that instills confidence in stakeholders by stabilizing earnings and shielding your business from commodity and market volatility. We effectively become your partners in risk management – monitoring markets in real-time and ready to refine the strategy as needed, so you can focus on your core operations knowing your downside is protected.