Commodity Risk Management

Commodity Risk Management Solutions From Aspect

AspectCTRM’s Commodity Risk Management Module provides a powerful credit and market risk solution, and an affordable alternative to using spreadsheets. Address a multitude of risks including: price, volume, volatility, quality, delivery counterparty, credit and multi-currency, with a full spectrum of physical and financial tools. The second data is entered into AspectCTRM, users can perform instant analysis and monitor individual portfolios and exposure across the organization. Aspect clients are able to integrate this Module with their internal systems to complete the cycle and gain real-time commodity risk management and analysis controls.

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Risk Analysis Supports Confident Decision Making

AspectCTRM features best-in-class functionality for credit, counterparty, market, and price-related risks. The global recession has pushed companies to perform better, reduce costs, create more profits, manage counterparty credit risk more closely, and obtain credit in a tight market. The resulting demand on CTRM systems includes more simulation and “what-if” analytics; supporting financial services companies who are taking more active physical positions – and delivering more proactive risk management capabilities and visibility throughout the enterprise.

Say Goodbye to Spreadsheets

A series of several studies conducted over the years revealed that 91% of the spreadsheets surveyed contained errors. A simple, honest mistake can cost a company millions in losses, and many have learned firsthand the hard way. What is the use of spreadsheets to manage trading and risk activity costing your business? Waving a spreadsheet at the bank is no longer acceptable in today’s climate when trying to secure credit. Banks require risk reporting from professional systems.

Best Practices in Credit Risk Monitoring

Default risk is higher than ever and maintaining credit worthiness is a challenge for companies of all sizes. You’re watching your exposure while your customers are watching theirs. With AspectCTRM, you gain best practices reports and management to control credit risk exposure and ensure the companies you’re doing business with can pay for services. AspectCTRM delivers all the reports you need, including: Real-time risk exposure reports by counterparty; credit limits and warnings notifications; trade entry preventions for violators; exposure reports for contracted, delivered, invoiced and overdue transactions; over-the- limit and threshold reports and more.

AspectCTRM Allows You To:

Set, standardize and enforce credit and treasury department policies across the organization
Provide credit managers insights into problems before they occur with reports for both physical and financial deals throughout the lifetime of a trade
Obtain and manage your own credit worthiness through managing costs effectively and providing banks and customers needed reports through system activity
Be notified if a contract requires a letter of credit (LOC), and stores and accounts for bank documents in credit exposure reports

Real-Time Profit & Loss, Exposure and VaR Reporting

AspectCTRM calculates P&L, exposure and VaR in real time and reports by portfolio, strategy, book, trader, region and more. Like our Trade Management functions, it relies on OLAP reporting tools that are used to continuously update and monitor physical and financial portfolios with exposure reporting intraday and in real-time as market prices are updated. Most vendors perform inter-day risk calculations over many hours which puts AspectCTRM users at an advantage in the market. Aspect Enterprise Solutions also builds risk reports tailored to individual corporations. For example, various versions of a daily report have been produced that provide a quantitative assessment of the various risks in each portfolio, with drill-down/drill-around functions to allow the identification of relevant events which give rise to sudden changes in exposure and position.

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Solution Benefits

Powerful risk engine puts risk managers in control with a clear understanding of market, credit, settlement and operational exposures

Monitor the value of marked-to-market, cash positions, value-at-risk (VaR) and P&L simultaneously with market fluctuations, and as deals are entered and updated. This empowering capability is surprisingly still out of reach for many energy companies using older technology or spreadsheets

AspectCTRM supports a daily risk reporting process for Middle Office and Risk Managers to assess activity from the previous trading day. A daily book close process is used to allow the system to automatically calculate daily P&L changes, MTD, YTD, etc. and to snapshot positions by strategy, book, location, trader, etc. A set of standard reports is published to facilitate the daily review

Calculate optimum hedging strategies with the Optimal Hedge Calculator, a sophisticated decision support tool for traders

Access VaR for 100,000-deal portfolios in less than 5 seconds

Easily manage and group deals into a hierarchy of positions and strategies by commodity, location, counter party, individual or specific trade strategy

Customize screens, set security limits on data, and view workflow and audit trails

Gain true, real-time accessibility of positions, sliced and diced completely configurable

Easily surf live and historical positions, P&L and VaR like you surf the Web

Reduce unexpected trading losses, and blind spots in company-wide exposure throughout the trading day

Gain full support of physical and derivative deals

Improve risk-adjusted-return-on-capital, credit ratings with banks, and management of your inventory at risk

Enhance cash flow through greater visibility and back-office integration

Commodity Risk Management Module