Industrials lack price risk skills, says risk adviser

Outsourcing of price risk management will be a major growth area over the next few years, as industrial companies lack the skills required to manage their commodity risk, said Chris Bowden, chief executive of price risk services firm Utilyx.

According to Bowden, industrial companies in Europe have been shocked by the increase in energy costs over the last year, but lack the requisite skill sets to properly manage energy price risk themselves.

“They might have energy managers and engineering people, but I don’t think many have risk managers,” he says. “The skill sets that most procurement directors have, very few have risk management skills available to them.”

The issue, according to Bowden, is finding the right people outside of the major financial centres. “The people they need won’t naturally gravitate to the areas these companies are based, in the hinterlands of UK and Europe. You won’t get them to move to the big industrial centres in the UK where these companies sit,” he said.

“You’re already seeing a lot of companies outsourcing pension fund management; more companies outsourcing treasury, FX, interest rates. It’s not the core competency of a big manufacturing company to manage price risk,” he added.