Supply risk

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Supply risk

The risk associated with a change in raw materials or input to a project from those assumed or projected. In the context of a resources production project, this is called reserves risk.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Supply Risk

The risk that a company will suffer a loss because it becomes unable to buy the raw materials necessary to make its products. For example, a corn mill has the supply risk that not enough corn will grow or farmers will be unable to transport it to the mill or something else will happen that will render the mill unable to provide its services.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
Organisations stand to reduce their environmental footprint, safeguard local sources of water, increase operational efficiency, minimise operating costs and mitigate future water supply risks.
Micron (MU) upgraded to Equal Weight from Underweight at Morgan Stanley with analyst Joseph Moore saying global trade tensions and potential supply risks are driving shorter term inventory accumulation and he believes his Underweight rating is now "less actionable." 2.
While the DRAM market remains oversupplied, Moore said in a Tuesday note that trade tensions and supply risks are now creating near-term demand as companies build inventory levels to hedge against risk.
Even though oil prices fluctuate with supply risks, lower global economic growth is expected to put downward pressure on oil demand, IATA says.
"Multiple supply risks remain, as tension continues between Iran and the US, which could turn disruptive," ANZ bank said on Friday.
Birol, however, said that supply risks caused by geopolitical uncertainties in countries such as Venezuela, Iran, Libya and Algeria were making him "nervous."
The two ministers also discussed the dynamics of supply and demand for oil, focusing in particular on the state of the global economy, demand for oil and potential supply risks. Both Al-Falih and Novak reiterated their joint commitment to ensuring the adequacy of oil supplies, particularly in light of the uncertainties in the markets.
Crude price had on Tuesday breached the USD 76-mark - its highest since July supported by supply risks emerging from Venezuela, Africa and Iran.
On the other hand, Ehsan Khoman, director and head of Mena Research and Strategy at MUFG Bank, told Gulf News that despite geopolitical concerns, stemming from the magnitude of Iranian oil supply risks, investors continue to remain concerned over the re-emergence of oversupply.
Any supply risks would likely boost the commodity's price.
That said, there are no signs of tightness in the market, in particular as some of the supply risks are receding.