Metaverse Chocolate Company (MCC) is a collaboration between two founding partners, one with extensive industry experience producing small-batch high-end chocolates, the other a social media influencer with substantial undisclosed assets from early-stage cryptocurrency investments. 

MCC will offer its upscale customers the ability to custom-create small-batch chocolate bars blended to their exact specifications with regard to cacao content and the addition of coffee and/or nuts. MCC will operate as an online-only platform that will accept payment only in Ethereum, currently the most transactionally efficient cryptocurrency. 

MCC will to begin production in January of 2023, and is seeking a supply deal for a 12 month forward term. 

MCC is seeking a contract priced in Ethereum, and will pay all invoiced amounts in Ethereum. As part of the due-diligence process, as a good-faith gesture, MCC is willing to disclose to the supplier a cryptocurrency wallet that contains Ethereum sufficient to pay for the estimated value of the first three months of the contract. 

MCC seeks the following base volumes of cacao, coffee and tree nuts by month (all figures in kg):

Evaluate the risks inherent in the Metaverse Chocolate Company mini-case. The Metaverse Chocolate Company has contacted your firm with a Request for Proposal for a transaction. At a bank or merchant, as a trader your responsibility would be to review the proposal and, if deemed interesting, decompose the risks and figure out how to price the transaction. Read through their proposal and identify as many risks as you can, then rank them in order of severity to the economic outcome of the transaction. Do you think a bank can price all of them, or are there some that you consider deal breakers?

Mar Jun Jul Aug Oct 56,000 Jan Feb Apr May Sep Cacao 30,000 32,000 34,000 38,000 41,000 43,000 46,000 49,000 52,000 Coffee 2,000 2,000 2,500 2,700 3,000 3,200 3,400 3,700 Tree Nuts (Various) 4,000 4,000 5,000 5,400 6,000 6,400 6,800 7,400 8,000 8,400 9,000 4,000 4,200 4,500 Nov Dec 59,000 63,000 4,800 9,600 MCC will require the flexibility to increase the contract volumes up to 150% of the base volume if business conditions demand. MCC will notify the counterparty on the third to last business day of the month of their actual required volumes for the following month, based on pre-order information obtained from their website. All volumes of cacao, coffee and tree nuts are to be delivered to MCC's production facility located approximately 98 miles via surface highway from the warehouse facility at the Port of New York. As the MCC is operating with an inventory-light, produce-on-demand model, any shipment delays would severely impact the firm's ability to produce and deliver product and impact future earnings. To compensate MCC for this loss of revenue, there will be a penalty of 5% of the minimum value of the volume per day. Identify and rank all of the risks present in this RFP by potential impact to the economics of the transaction.