What Is the Risk If the Final Settlement Price Deviates Significantly from the Spot Price?

If the final settlement price deviates significantly from the true underlying spot price, it introduces "settlement risk." For hedgers, this means their futures position will not perfectly offset their spot market exposure, leading to unexpected gains or losses and undermining the purpose of the hedge. For speculators, it creates an inaccurate P&L, potentially leading to unfair wealth transfer between contract parties.