When the Chicago Board Options Exchange this month launched the world's first volatility index on crude oil, it was a sign that the world's largest options exchange had spotted a timely opportunity.
Its Volatility Index - or Vix, as it is known to many in the markets - has long been a global benchmark for measuring and trading on the volatility of stock market indices such as the S&P 500.
But with crude oil soaring to more than $145 a barrel, the CBOE believes there is now a need for a Vix product that allows investors to take bets on measuring the market's expectation of volatility in crude oil prices. A similar index on gold and other commodities is in the works at the exchange.
The development could be no clearer sign of the huge appetite for products that allow anyone from corporate treasurers and speculative traders to use derivatives to manage their risks of exposure to increasingly volatile commodities.
A long period of relatively stable interest rates and foreign currency movements had led many companies to become somewhat complacent about the need for hedging.
But that has changed. Keith Strachan, treasury director at Deloitte, an auditing and accounting firm, says: "Many companies are reviewing their hedging policies and reconsidering their view on risk because of the massive increase in volatility in markets generally.
"Where they were not necessarily hedging because they felt it was a risk they felt they could carry - particularly with energy - all of a sudden it is having a material impact on their performance. There is an increasing use of derivatives for the scope of risks to cover," he says.
Take Stagecoach, the UK-based operator of bus and rail networks in the UK and the US. The company is a big buyer of ultra low- sulphur diesel, so needs to have some certainty about what fuel costs will be as prices keep rising.
Assume Stagecoach wants to hedge 1m litres of fuel over a period of 12 months. The company will buy from a bank a fuel swap contract, under which Stagecoach commits itself to pay a fixed price per litre - say, 60p in current market conditions - over the life of the contract.
In return, each month the bank will pay Stagecoach whatever the market price is for that fuel - whether higher or lower than the fixed price Stagecoach had committed to paying the bank initially.
While Stagecoach may find that the actual price of fuel is sometimes lower than the price it committed itself to paying to the bank - say, 50p a litre - it can offset this by the reduced, at-market price of fuel it is required to pay to its fuel suppliers.
Irrespective of whether the price goes up or down, Stagecoach thus pays 60p a litre when everything is netted out.
However, extreme volatility in commodities such as grains, coffee, dairy, rubber and steel have forced company treasurers to think about hedging commodities as well - and this is new, hence the CBOE's Vix on oil.
Jiro Okochi, founder and chief executive of Reval, a risk management and derivatives valuation firm, says: "Although there are the obvious companies such as airlines and food producers, which have been hedging commodities for decades, for the most part, companies have just woken up to the need for commodity hedging.
"It's one thing to have your transportation costs go up but to have the key ingredients double in price in the past 12 months has woken up even the most derivative-fearing CEO or CFO."
These developments are provoking a re-evaluation of the traditional division of labour between treasury and procurement. Interest rate and foreign exchange (FX) risk has tended to be handled by treasury and commodity risk at a procurement department, which typically locks in price risks to contracts or may use exchange-traded futures.
Martin O'Donovan, assistant director, policy and technical, at the UK's Association of Corporate Treasurers, says: "What can be more difficult is deciding who, within a company, is responsible, because you'll have a procurement officer whose job is to get the best price for oil and get good tariffs on electricity and a treasurer, who is familiar with hedging future price risk through the financial markets."
As the role of a treasurer in managing risk overall has moved up the boardroom agenda, many corporate treasurers have encountered a steep learning curve.
Mr Okochi says: "In today's environment, suppliers do not want to lock in their profits and are pushing back on fixed price contracts or will only go out a year. And exchange-traded futures contracts are not friendly to treatment under accounting standards. "First-time commodity hedgers in treasury therefore have a lot to learn about the nuances of this market and all the pricing conventions."
This is especially the case in Britain, where treasury has long been seen as more of a cost centre than a profit centre.
In Scandinavia, by contrast, treasurers tend to be more comfortable with risk, according to Yann Umbricht, partner in the treasury advisory practice at PwC, another auditing and accounting firm.
"It's a little bit more aggressive. They would say: 'What's the euro/dollar exchange rate likely to do, I am the treasurer and I should take a view of that and take a position to try and trade gains on that'."
As pressure is increasing to find creative ways to hedge, banks have quite naturally been peddling ever-more complex products to deal with those risks.
"The volatility is without doubt very good for the banks," says Mr Strachan.
But there are dangers, some warn.
Rules governing the accounting for derivatives tend to limit the use of more complex products, because they may not qualify for "hedge accounting" under an international accounting standard on derivatives, known as IAS 39.
This allows companies better to match the valuation of a derivative with the transactions that are being hedged.
Mr Okochi says that achieving hedge accounting under IAS 39 is tricky when it comes to commodities. "The challenge lies in modelling the exposure so as to determine whether you qualify for hedge accounting.
"Many corporates use more than one commodity in any finished product and have other fabrication costs associated with it that cannot be excluded.
This can make it difficult to justify to the auditors that they know their true commodities risk, or have a history of the price risk - which is also typically needed for one of the tests under IAS 39."
The need to ensure that the accounting outcome of hedging is as predictable as possible has led companies to default to using only plain "vanilla" products - such as simple interest rate swaps and foreign exchange forward contracts, which can be bought from many banks.
Mr Umbricht of PwC says that treasurers have grown more comfortable with the accounting issues where they are "looking at bringing in a little more complexity [in their hedging] . . . but not to a great extent".
Mr Strachan of Deloitte says: "CFOs of medium-sized businesses may not have the resources or time fully to appreciate the intricacies of a hedging product sold to them.
"Complex products can conceal high margins and stringent exit conditions; there's no such thing as a free lunch."