Commercial risk in commodity transactions tends to fall into three categories: who you are dealing with, whether the goods move as agreed, and what happens to price in the meantime.
Counterparty risk is addressed through diligence and structure. Understanding ownership, operating history and the counterparty's role in the supply chain is a basic requirement before commercial terms are discussed.
Delivery and performance risk is managed through clear contractual terms, realistic timelines and independent verification where appropriate. Price risk is a separate discipline and should be considered explicitly rather than absorbed by default.
Nothing in this article constitutes legal or financial advice. Businesses should take appropriate professional advice on their specific circumstances.