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The Info List - Volume Risk


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Volume risk is a commodity risk which refers to the fact that a player in the commodity market has uncertain quantities of consumption or sourcing, i.e. production of the respective commodity.[1] Examples of other circumstances which can cause large deviations from a volume forecast are weather (e.g. temperature-changes for gas consumption), the plant-availability, the collective customer outrage, but also regulatory interventions. Example[edit] A electricity retailer cannot accurately predict the demand of all house holds for a given time which is why the producer cannot forecast the precise time that a power plant will provide more electricity that consumed, even if the plant always delivers the same output of energy. References[edit]

^ Kandl, Peter; Studer, Gerold (January 2001). "Factoring in volume risk". Risk
Risk
magazine: 84f. Retrieved 23 October 2015. 

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