We can help hedge physical or financial risk. Our business is built on our ability to manage and minimise risk. Our clients benefit directly from this core expertise and de-risking policy when we handle business.
Handling physical risk
We are highly adept at managing physical risk. We have a strong track record in handling transport and logistics arrangements, so we can ensure that any risk to your product in transit is minimised and managed.
For example, Integra works closely with insurance and shipping markets globally. We have underwriting and insurance people in the maritime centres of London, Oslo, Rotterdam, Singapore and Hong Kong.
We understand and manage the complex insurance involved today in covering the cargo, ship, and freight, as well as the pollution and environmental risk cover required.
We ensure that the ships and cargoes we use are insured in the best and most cost effective manner possible.
For example, for the pirate zone around Somalia, we work with experienced ship owners and select larger ships that sit higher in the water and are able to move faster; or we book whole vessels that only carry our cargoes and sail part-loaded. These mean higher shipping costs, but ensure we are able to use the routes and destinations preferred by customers at an acceptable level of risk.
Hedging financial risk
Many people think traders are risk takers. This is far from the truth – or at least not for Integra. We are highly risk averse. Our business is built on our ability to manage and minimise risk. For example, we have become highly skilled in the use of financial hedging mechanisms and we frequently use this expertise to manage the financial risk of a deal for our customers.
Often an upstream monomer producer may need to lock the price of his product to that of a key feedstock such as naphtha, while a downstream consumer needs to guarantee a fixed price for the monomer he buys because of the long-term commitments.
Both positions are reasonable for each party, but too risky for the other to consider. If possible, we will handle this exposure on behalf of our customers. In other cases this may mean currency exposure or payment exposure where companies want to sell product, but their potential customers are not fully bankable without adequate guarantees or credit insurance, which makes it hard for them to sell to the client. We can facilitate the transactions as well as manage the deliveries, where we become the counterparty in the transactions.