Exposure

Exposure represents the potential financial losses arising from the risks associated with a particular investment or asset class. When commodity prices or currency exchange rates fluctuate, companies have an exposure risk. Hedging provides a way to manage that risk.

In MineMarket, exposure can be managed via the Hedging Explorer for single quotation periods (QPs), or via Commodity Exposure Reports and Foreign Exchange Exposure Reports for multiple QPs.

For example, companies may have policies to hedge all despatch orders to 50%-70% of their value, or to hedge all invoice instalments against exchange rate movements.

However, the quantity and value of despatch orders and invoice instalments can change. Deliveries might only partially be fulfilled, resulting in a lower quantity of material. Deliveries may be delayed, and the values might then be calculated based on prices in a different month.

Hedge positions for these despatch orders and invoice instalments must be adjusted if they no longer meet the company's hedging policy. Hedge positions may be unwound, or carried forward/back.