Digitalization in commodity trading is reshaping the way businesses are utilizing their resources. It is not only accelerating the pace of business but digitalization is also making commodity trading companies more resilient to significant market risks. Commodity trading houses around the world are witnessing a massive rise in the adoption of technology in managing and controlling various business risks, and the rise of digitalization in commodity trading is expected to mark the dawn of a new era.
Political uncertainties, fluctuating markets, changing regulations, and trade wars are among the biggest hurdles in the commodity trading world that give rise to multiple business challenges. Market risks, financial risks, regulatory/compliance risks, and counterparty risks have always swamped commodity traders. However, the path of digitalization is likely to show the way towards tech-driven risk management for the commodity trading world.
The global wave of digitalization has reached the commodity trading industry as a majority of businesses are turning digital resources for performing their everyday operations. The industry is moving towards capturing the complete potential of digital technologies in making commodity trading more profitable in the Information Age.
Commodity trading companies are not only focusing on establishing entire digital divisions of business but also deploying technologies for effective commodity trading risk management. Growing awareness about the benefits of technologies in risk management is only bolstering the wave in the commodity trading space.
Tech-driven Commodity Trading Risk Management – Converting Data into Information
With a majority of commodity trading companies witnessing their competitors squeezing their margins, the adoption of tech-driven commodity trading risk management tools has become the top priority for them.
As the first step of digitalization, many players are aiming to streamline their back-office operations by implementing a digital business management system. Replacing traditional systems with state-of-the-art enterprise management tools has become one of the top trends in the commodity trading industry.
Increasing use of digital technology has also triggered the importance of interpreting information from the incoming data for businesses. Algorithms that can enable commodity traders to control and manage risks through the appropriate use of data are gaining immense attention in the space.
Leading businesses are likely to shift focus on investing in processes and systems that can centralize data and enable tech-based commodity trading risk management algorithms. Here are some of the prominent stages of digitalization that are expected to transform the commodity trading risk management space.
Using Digital Alternatives for Traditional Business Operations
The simplest and most basic way of digitalization is to use electronic tools for tracking and carrying out the simplest business processes. It is mainly aimed at improving back-office efficiency and minimizing operational costs of business. Electronic tools such as CommodityPro are becoming a must for digitalizing processes including administrative and human resource management as well as financial management.
Commodity trading risk management and business management software are being widely used for the processing of commodity derivatives and electronic clearing of over-the-counter trades. This would continue to remain the first step towards digitalization for commodity trading businesses as it streamlines operations as well as data and reduces operational costs to great extents. Achieving the first stage of digitalization is simple. Investing in such electronic tools for basic tasks can help businesses to avoid inaccuracies and amplify efficiencies to a new, digital level.
Automating Repetitive Processes through Digital Resources
There are a number of business operations involved in commodity trading such as delta hedging, financial management, asset optimization, along with risk management and trading, which can be automated using digital tools to make processes simpler.
Optimization of basic tasks through digital automation is the second stage of digitalization in commodity trading business as well as commodity trading risk management. Leading commodity trading houses have already turned to commodity trading risk management software such as CommodityPro that can help them manage and reduce risks in trading and grab their profit margins.
This stage of digitalization mainly avoids slippages and decreases execution costs for commodity traders and can simplify the front, middle, as well as back office operations.
Data-driven Reporting Capabilities and Business Assistance
Regulatory and compliance risks, counterparty risks, and country risks are among the major roadblocks for modern commodity trading businesses. Managing these risks and mitigating the negative impacts on business while maintaining an edge in the market is a big task.
However, with the rise of digitalization, major market players are resorting to data-driven algorithms that can offer intelligent assistance in measuring commodity trading risks. CommodityPro is one of the leading commodity trading risk management software that offers data-based reporting capabilities through which businesses can draw actionable insights while making important trading decisions.
CommodityPro provides a vast potential for integrating Artificial Intelligence and Machine Learning frameworks which can take commodity trading businesses to the next stage of digitalization. It not only turns data into information but also helps traders reduce counterparty risks and devise a comprehensive risk management strategy.
Digitalizing the Entire Value Chain in Commodity Trading Business
In order to leverage the complete potential of digitalization in commodity trading, businesses must implement electronic tools at nearly all phases of their value chains. Right from the back-office tasks to complex processes such financial risk management and regulatory compliance, most operations can be automated with digital platforms for commodity trading risk management.
These platforms integrate advanced data analytics and intelligence algorithms that can intelligently track current operations and assists in mitigating major risks in the forthcoming taks. The final stage of digitalization in the commodity trading industry includes a level of automation where digital resources offer customized risk analytics and convert them into on-the-go risk reporting and insights.
Commodity trading risk management tools like CommodityPro offer high-frequency trading risk management strategies for the entire value chain. Commodity trading businesses can ensure the monitoring of their funds, documents, along with goods across the whole value chain using just one digital commodity trading risk management platform. While it saves costs and improves supply chain management, digitalization in commodity trading can also help businesses gain a competitive advantage by implementing centralized risk management algorithms.
CommodityPro – Ensure Digitalization in Commodity Trading Risk Management
CommodityPro is a leading risk & control management system for all types of commodity trading enterprises. It implements state-of-the-art technology that can help businesses map the movement of documents, finances, and goods using just one platform.
With the help of CommodityPro, you can implement a centralized system that can reduce and control your counterparty risks, insurance risks, financial risks, as well as markt risks. Reach out to us to know how we can ensure successful digital transformation of your business with our best-in-industry commodity trading risks management platform.