Managing Risk in Commodities Trade Finance


A major South African bank has established at it’s head office in Johannesburg, a department to assess risks and manage exposures arising from structured commodity trade finance transactions. Deals are originated through it’s network of offices in Africa. The department consists of credit risk professionals drawn from the bank’s corporate banking business, who in turn liaise with counterparts in client countries.

The bank sought a comprehensive training solution that could lead to a consensus across markets about the types of exposures to be solicited, manner in which trade finance solutions should be constructed in a risk- and capital-efficient manner using a commonly adopted approach to identify credit, market and operational risks.

Client needs

  • Being predominantly Africa focused bank they preferred relevant case studies as per the local market.
  • A specific case study focusing on downstream oil financing (l/c s and refinance loans, stock monitoring vs CMA, capital relief and recovery values, co-mingling and other risks)
  • A Section on counterparty credit risk/methodology of analysis to include a specific section on assessing credit worthiness of commodity traders.
  • More focus on inventory finance than pre-finance.
  • Minimum documentation standards.


Completely customized training delivered over four full days covered Inventory finance, pre-finance, warehouse finance, receivable finance.

In order to highlight risks embedded in transactions, the training also included coverage of topics such as the nature of transport documents, insurances, and perfection of security interests.