Allegro Development: New White Paper Offers “A Practical Approach to Risk Management”

Allegro Development: New White Paper Offers “A Practical Approach to Risk Management”

A new white paper by risk management authority Dr. Vincent Kaminski explores the growing need for risk management platforms for the energy trading industry, which he says must “reinvent its tool box” to meet the new social and economic forces that continue to shape modern energy markets.

Kaminski, who currently serves as a professor of energy finance and energy derivatives at Rice University’s Jesse H. Jones Graduate School of Management, notes in A Practical Approach to Risk Management that record market volatility, changing regulatory environments and the increasing globalization of the energy marketplace pose “formidable IT challenges to risk management in the energy industry.”

At the root of the need for a universal risk management solution is what Kaminski calls a “skills and knowledge gap” between traders who know the energy markets and regulatory frameworks, analysts who employ highly stylized and abstract systems, and programmers who often have limited industry knowledge and poor communications skills. The challenge companies face is bringing these professionals together and ensuring they work in an effective way. Currently, the critical missing link to accomplishing this goal is a stable and scalable IT platform .

Typically, platforms used for energy trading and risk management have evolved from two types of systems: those used for handling physical flows of commodities, and those for financial systems trading bonds and equities. Specialized modules are then added to support energy trading; however, the end result is often a multiple-platform system that creates major integration issues.

Kaminski suggests that IT teams should evaluate their current IT platforms with an eye to several critical risk management functions:

• A holistic representation of risks;
• Integration of trade processing;
• Integration of downstream systems with corporate systems;
• Efficient links between technology, processes and people.

Historically, risk management has been a low priority in the development and installation of software systems. However, with the pressures and volatility in today’s energy markets, an IT-based solution is critical to avoid potentially major catastrophes.

As Kaminski concludes, “Given what is going to happen in the energy market – the supply and demand pressures, globalization and integration – every company will need efficient risk management. A scalable and stable IT platform and the right combination of people, processes and technology will be critical, not just for performance, but also for survival.”

A Practical Approach to Risk Management is available for download on PDF from the Allegro website .

About Allegro

Allegro is the global leader in energy trading and risk management (ETRM) solutions for producers, refiners, power and gas utilities, commodity traders and commodity consumers. With 25 years of steady growth and deep industry knowledge, our enterprise-wide trading and risk management platform drives transparency and efficiency across front, middle, and back offices, while also managing complex logistics associated with physical commodities. Allegro’s proven solutions provide traders, risk managers and management with flexible solutions - across all currencies and commodity types - that allow decision makers to hedge and execute with confidence. Allegro is headquartered in Dallas, Texas, and serves customers worldwide with offices in Calgary, Houston, London, Rotterdam, Singapore and Zurich, along with a global network of partners.

Members of the media please contact Christie Lindstrom at media@allegrodev.com and for Analyst Inquiries please contact Ray Asif at analysts@allegrodev.com .

To view this piece of content from cts.businesswire.com, please give your consent at the top of this page.

Contact:

Allegro
Christie Lindstrom, 214-237-8117
media@allegrodev.com