Case Study

ECOM

Agriculture & Softs Client Success Risk Analytics

ECOM successfully implemented Lacima Analytics for Value-at-Risk (VaR) reporting on a portfolio of physical and financial contracts across soft commodities including cotton, cocoa and coffee.

The Project

ECOM identified a need to automate their risk management measurement and reporting capabilities whilst seeking a solution to model, monitor and manage market risk exposure.  The chosen solution would be required to provide consistent and comprehensive measurement of ECOM’s market risk, factoring in the nuances of ECOM operating as a merchant supply chain manager in the soft commodities sector.  A key requirement was the ability to value and risk manage a portfolio consisting of both physical and hedging positions that trade in many different markets.

The Client

ECOM Agroindustrial Corp. Ltd (ECOM) is a leading global commodity merchant and supply chain management company.  ECOM operates in 35 countries and their primary focus is on sourcing coffee, cotton, cocoa and cotton direct from producers to then export to coffee roasters, cotton textile mills, and chocolate manufacturers worldwide.

The Solution

ECOM initiated an extensive RFP process which concluded with Lacima being selected based on their quantitative expertise in valuing physically backed contracts together with the risk management reporting capabilities offered by their market leading solution, Lacima Analytics. Lacima Analytics for Value-at-Risk was implemented in Phase One and this was extended in Phase Two to automation of daily risk reporting processes.

The Outcome

ECOM was able to implement a first phase of Lacima Analytics within six months. Lacima Analytics is enabling ECOM to consistently and more accurately quantify the market risks in soft commodity contracts including stress test on basis risk – a natural risk for any commodity player. In the second phase of the project ECOM’s day-to-day risk process was fully automated allowing ECOM to run their daily risk reporting as an overnight process.

This automation has led to saving countless man hours each day in preparing, checking and disseminating risk reports to various stakeholder groups.

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