Building a hedge policy: exposures, hedge ratios and risk committee packs

A hedge without a policy is a trade. A hedge policy turns commodity hedging into a repeatable control framework the board can trust.

Define exposures in business language

Policy should state which volumes, tenors and entities are in scope — and which risks (flat price, basis, FX) are explicitly covered.

Ambiguity here is how unauthorized hedges appear later.

Set hedge ratio bands, not single magic numbers

Bands by horizon (e.g. 50–80% for next 6 months) give desks room while keeping governance tight. Escalation rules matter when markets gap.

Report with the same numbers used to trade

CommoHedge helps teams export board-ready views from the same pricing and exposure spine used on the desk — closing the classic “committee pack vs trading book” gap.

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