Enterprise Risk Management

Benefit from holistic risk management on a common platform

Enterprise Risk Management Software – For All Four Key Areas of Risk

Sharp price volatility. Increasingly risky counterparty credit. Greater regulatory oversight. These are the hazardous business conditions defining today’s energy and commodities trading and management. Yet surveys show many companies still try to manage operations and risk with disparate systems and spreadsheets. This creates information silos across the business – and greater opportunity for costly human error. It decreases your ability to extract meaningful data for proactive decision-making. And it minimizes your ability to introduce automated controls and work flow.

In today’s challenging environment, complete transparency and control across the enterprise require that all four key areas of exposure identified by the Committee of Chief Risk Officers (CCRO) – market, operational, counterparty credit and regulatory – be tightly integrated. Triple Point’s award-winning Enterprise Risk Management software, Commodity XL®, is the only solution that provides best-of-breed functionality on a real-time, integrated platform across all four key risk areas.

Manage enterprise risk on an integrated platform

Market Risk – Effectively Control Price Volatility

Business Problem: Price Volatility Across the Supply Chain

The last few years have seen a dramatic increase in price volatility and risk, almost universally across all commodities including energy, agriculture, freight, and metals. Due to a tight supply/demand situation, increasing geopolitical risk, and more interconnected commodity price movements (e.g. biofuels), analysts forecast commodity price volatility to remain at high levels for the foreseeable future.

Commodity XL’s Enterprise Risk Management risk engine is uniquely capable of capturing and controlling all aspects of energy and commodity market risk – price, supply, load, credit, and delivery – for real-time analysis of position across the enterprise. It supports a comprehensive set of risk metrics and price risk management tools that are critical for effective trading, sourcing, and hedging of commodities in volatile markets, including:

  • Value-at-Risk (VaR)
  • Greeks
  • ‘What-If’ Scenarios
  • Portfolio Stress Testing
  • Sensitivity Analysis
  • Mark-to-Market (MTM)
  • P/L Attribution

Operational Risk – Acquire Superior Data Transparency and Controls

Business Problem: Lack of Integrated, Actionable Enterprise Data

Operational risk stems from the misrepresentation and mishandling of information, resulting in a lack of actionable data and poor decision support. Over-reliance on spreadsheets, human error in rekeying data, unauthorized trades, limit-breaking and improper controls are just some of the operational risks facing energy and commodity participants.

Commodity XL enables companies to effectively mitigate operational risk by deploying a system of business processes and checks-and-balances to support increased control and efficiency:

Front Office Controls sets trade and counterparty limits, uses them to report appropriate exposure, and sends real-time alerts when limits are approached or broken.

Integrated Logistics unites scheduling and logistics with trading and accounting on a real-time basis for improved transparency, enabling the effective and efficient sourcing, movement, and storage of commodities.

Straight-through processing (STP) enables data to be entered once at the source and then immediately flow through the entire organization, resulting in faster and better decision-making.

Credit Risk – Optimize Credit and Liquidity Decisions

Business Problem: Inaccurate, Untimely Credit Data

Managing counterparty credit risk effectively is a minefield. Access to detailed, actionable credit exposure and liquidity obligation information – typically contained in multiple systems including trading and ERP – can take hours, if not days to obtain and analyze. One piece of bad or delayed data can lead to the wrong credit decisions, putting your bottom line at great risk.

Commodity XL’s Credit Risk solution suite is a complete end-to-end solution giving real-time visibility into credit exposure and liquidity obligations – in both current market conditions and stressed scenarios. It integrates counterparty management, collateral optimization, contract management, concentrations and credit analytics within a single, transparent framework. It enables companies to improve efficiency in their credit processes and optimize credit and liquidity decisions – while improving margins, preserving favorable financial ratings, and retaining shareholder confidence.

Regulatory Risk – Achieve Full Compliance in Hedge Accounting and Fair Value Disclosure

Business Problem: Increased Compliance Requirements

Volatile markets, difficult credit conditions and the uncertain business environment are driving increased regulatory and government oversight and regulation. Nine out of ten executives expect the business costs of regulation to rise over the next three years.

Commodity XL’s Treasury Management and Regulatory Compliance solution suite supports full compliance with both hedge accounting and fair value disclosure standards under:

  • ASC 815 (FAS 133)
  • IAS 39 (IFRS 9)
  • CICA 3865
  • AASB 139
  • SAS 133
  • ASC 815-10 (FAS 161)
  • ASC 820 (FAS 157)
  • IFRS 7

Commodity XL’s dynamic hedge accounting engine supports a comprehensive risk management program that enables firms to balance optimal economic benefit, risk management and stable financial statements – a critical but complex requirement of today’s shareholders. Its fair value disclosure module provides the tools and framework to define, measure and manage hard-to-value instruments. It also provides advanced modules for foreign exchange, interest rate and multiple commodities on a common platform, allowing you to greatly reduce the time and cost required to achieve full compliance.

To learn more, click here for the full Enterprise Risk Management Brochure.

How to get started – To learn more about how Commodity XL enables companies to holistically measure, monitor and control all key risks inherent and unique to the energy and commodity markets, download a brochure, request more information or call +1.203.291.7979.