The Strategic Optimization solution helps companies protect margins and stabilize earnings by finding the best balance between hedging, inventory, and supply chain decisions using advanced mathematical optimization. It calculates optimal hedge ratios with methods like mean-variance optimization and CVaR minimization, adjusting positions dynamically based on price forecasts and changing market volatility to provide effective cash flow protection aligned with the company’s risk tolerance.
The solution also improves supply chain and procurement decisions: for example, selecting the most cost-effective coal deliveries or the right mix of forward and spot purchases to lower costs and manage risks. In processing industries, it supports blending and production choices, such as refining crude oil to maximise crack spread margins. It also recommends suitable financial instruments, favoring options for nonlinear risks and proxy hedges when direct hedges are not available.
Overall, this solution offers a data-driven, flexible roadmap that aligns risk management with market conditions and business goals, helping companies unlock value in volatile markets.