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Agenda

October 23, 2019

9:00 - 5:00

Committee of Chief Risk Officers (CCRO) meeting

For members and by invitation only.  For more information, please contact Bob Anderson, banderson@ccro.org

1:30 - 3:00

Pre-Conference Session 1:  Price simulation for risk management and asset valuation – Getting it right

Simulating energy portfolio risk factors, especially market prices, is fundamental to any risk management process. Yet many companies fail to get this right. What does a good price simulation methodology include and how should we test and validate existing or proposed solutions?

  • Fundamental vs. Monte Carlo…or both?

  • Simulations vs. scenarios – Benefits and considerations of each.

  • 1-factor vs. 2-factor modeling approaches – What does each represent and what do you get from that “second factor”?

  • Mean reversion and jump diffusion explained

  • Model validation & calibration – Build confidence in results, keep analytical processes objective, and prevent bad data from contaminating your process.

Speakers: 

Brock Mosovsky, Co-Founder, Director of Operations and Analytics, cQuant.io
 

Refreshment break

3:00 - 3:30

The Energy Trading and Risk Management (ETRM) technology markets are undergoing significant change – vendor consolidations & the rise of “mega” vendors, the transition from on-premises software to cloud solutions, the emergence of blockchain, new on-demand micro-services, the disaggregation of monolithic solutions…and the list could go on.  For companies that rely on these critical technologies, identifying the “best” solution and technology path can be critical to both near and long-term success in an increasingly complex energy marketplace.

In this session, leading CTRM market analyst firm, Commodity Technology Advisory, and a cross section of thought leaders representing ETRM technology providers and system integrators will review and discuss:

Pre-Conference Session 2 - ETRM technology landscape, evolution, emerging tech and outlook

3:30 - 5:00

  • The evolution and current state of the ETRM technology markets

  • Recent and ongoing vendor consolidation and the implications of the emerging “mega” vendors

  • Emerging technologies and ETRM – separating hype from reality

  • Critical considerations for firms seeking to update or replace ETRM solutions and technologies

  • What does the future look like for users of ETRM technologies? Where do we go from here?

Speakers: 

Patrick Reames, Founder and Managing Partner, Commodity Technology Advisory

Sulhi Akmehmet, Founder and CEO, CTRM Cloud
David Meyers, President, Enuit

Jay Bhatty, CEO & Founder, NatGasHub.com

5:00 - 6:30

Opening reception

October 24, 2019

8:00 - 9:00

Registration and continental breakfast

Opening comments

9:00 - 9:05

Speaker: 

Howard Walper, President, Alpha Insight

9:05 - 9:30

Presentation:  Major markets overview

This presentation will focus on the key factors driving volatility in commodity prices; the specific markets covered include natural gas, NGL, crude, refined products, and power.  We will discuss the impact of currency and trade wars, growth in renewables, US supply growth trends, renewed focus from Wall Street on capital efficiency, weather, and numerous other factors, with a thorough look-back at recent price movements and a forecast of our expectations for the next few years. 

Speaker: 

Bernadette Johnson, Vice President, Strategic Analytics, Enverus

9:30 - 10:45

Session 1 (Panel discussion): Modeling risk

How are current methods for quantifying risk faring in today’s energy markets?

What alternatives have emerged?

  • Risk modeling methods: What are the strengths and weaknesses of VaR as a risk tool for energy markets? How is stress testing being leveraged to improve scenario planning, model development and decision making? What models are being developed in the financial sector that could apply to energy? Is the energy industry ready to develop our own models?

  • Finding the right metrics for success: What metrics should an energy trading company look for, and how is that implemented in their trading programs? Performance P&L? Liquidity risk? Counterparty risk? Earnings at risk? Gross margins at risk?

  • Trade cycles: How are trade cycles changing and what is the risk impact? What is the current tenor of trades, position limit size and frequency? Are the risk profiles for physical and derivative trades similar? Cleared vs. bilateral trades – does the additional cost pay off in risk mitigated?

  • Market indicators: What other markets/market indicators are relevant to energy market risk management.

Speakers: 

Amir Andani, Chief Risk Officer, Just Energy

Marco Valle, Risk Manager, Shell

Gregory Broussard, Senior Director - Energy Risk Management Group, Cargill Inc.

Bob Anderson, Executive Director, CCRO

10:45 - 11:15

Break

Presentation:  Risk management of complex portfolios

11:15 - 11:45

  • Choosing the right risk metric – When to use VaR, CFaR, GMaR, or multiple metrics.

  • Price simulations – Why simulations are necessary, which prices to simulate, and what types of simulations to perform.

  • Asset valuation and optimization – Importance of capturing operational constraints and timeframes.

  • Hedge analysis – Designing and testing portfolio-specific strategies.

  • Statistical reporting – Turn model output into actionable business intelligence.

Speakers: 

Brock Mosovsky, Co-Founder, Director of Operations and Analytics, cQuant.io

11:45 - 12:45

Session 2: Pricing & risk management in the LNG markets

LNG is a truly physical market with potentially low margins, no true settlement procedure and a lack of indexation options.  How does one manage risk in this space?

Sponsored by

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Speakers: 

Jason Feer, Head of Business Intelligence, Poten & Partners

Craig Pirrong, Professor of Finance and Energy Markets, Director of the Global Energy Management

Institute at the Bauer College of Business, University of Houston

Lunch

12:45 - 2:00

Presentation:  Benchmarking key risk indicators - CCRO members this year are looking forward to developing our understanding of operative risks by creating an entirely new information source for industry related benchmarking statistics.  Key Risk Indicators (KRIs) are an important part of this initiative.  A keen awareness of KRIs can help energy companies with management of their operative risks that can be so elusive to address.

Sponsored by

Speaker: 

Bob Anderson, Executive Director, CCRO

2:00 - 3:30

Session 3a:  Track 1 - Risk in gas and power markets

  • Traditional gas markets: How are traditional methods for assessing natural gas trading risk changing?  How do seasonal models work with the recent unusually high rate of storms and blizzards?  Is climate change built into new models?  What is the outlook for storage, and how does this play into the mix?

  • Renewable valuations:  A discussion about the various issues faced in the valuation of long-term renewables contracts and quantification of risk exposures. Contracts in the renewable space involve new risks not readily measured by existing ETRM systems or traditional valuation models.  The risks are not transparently valued in the market, and many have a short history of realization.  In this presentation, we will discuss the types of risks presented by renewables activity, the availability and applicability of data necessary to quantify those risks, and challenges associated with updating valuations on a recurrent basis.

  • Regulatory risk in gas and power markets: Regulatory risk is a significant issue in both gas and electric power markets. There is uncertainty over whether new pipelines, to remove natural gas transportation bottlenecks, can get timely approval from state regulators and the FERC. Similarly, today wholesale power markets face state actions which can be viewed as either intrusive or corrective of FERC wholesale market designs and rules.

  • Credit risk in power markets: How has credit risk management changed, and what should companies look for going forward.

Speakers: 

Joseph Graham, Natural Gas Structuring & Origination, Uniper

John Funk, Chief Financial and Risk Officer, Engie Energy Marketing NA
Branko Terzic, Managing Director, Berkeley Research Group LLC
Matthew Montpetit
, Credit Risk Manager, NRG

2:00 - 3:30

Session 3b: Track 2 - Risk in crude and refined products markets

  • Major's perspective:  Global challenges for the crude market risk practitioner

  • The future of oil risk: “It’s the economy…”

    • An overlooked economic recovery that has left domestic demand behind

    • Global economies: America moves further into exports from imports

    • Fast markets: 500-point swings in stocks don’t matter, does a dollar move in oil?

    • East meets West: a look at the disappearance of the Middle East

  • Exchange and clearing perspective: This presentation from the exchange and clearing perspective aims to highlight the changes from a multiple crude and refined product stance, stressing points of departure and  especial areas of change as we see them from our global perspective, representing both risk and potential reward for traders and risk managers.

    • Background: U.S. Shale revolution and rising export barrels growth

    • How that has prompted  the industry to seek new representative alternative pricing, GC, grades.

    • How variability in crude quality and logistics has added complexity and uncertainty in pricing and hedging this incremental supply.

    • How exchange listed instruments help to de-risk or optimise export bbls and offer better risk management (Permian, Grades, WTL, etc)

    • View oil flows in context of the global complex, and implications for refined products. (62/67, Cracks, S2F etc.)

    • Understand Exchange product and process innovations in addressing the risks and challenges posted b rising U.S. crude and diesel export, IMO 2020 (New Fuel, Density issues) and changing global freight routes.

  • Price risk for refined products:  Mr. Best will be discussing current refinery runs domestically, expansion of refineries, production yields, global exports, and worldwide demand.  There will also be conversation pertaining to the impact of IMO 2020 on crack spreads.  We will also visit how the accessibility of domestic crude has also changed run rates at plant facilities.

Speakers: 

Marco Valle, Risk Manager, Shell

Carl Larry, Market Development Manager – Commodities, Refinitiv

Mike Davis, Head of Market Development, ICE Futures Europe
John Best,
Senior Vice President - Energy, INTL FCStone

Lisa Rigdon, former Vice President of Crude Oil Trading, BG Group and Brazil Team Lead for Shell Trading

3:00 - 3:30

Networking Break

3:30 - 5:00

Session 4 (Panel discussion) - Hosted by the Global Association of Risk Professionals (GARP):

Developing an effective energy risk management program - Where the rubber meets the road - Developing an effective risk management program for your organization. Hear leading market practitioners share their experience on these topics and more:

  • Are we looking at risk the correct way?

  • Choosing an ETRM system – buy vs. build

  • Are we getting closer to real time market risk models?

  • How do credit risk models match ETRM models?

  • What methods of risk modeling have proven the most effective?

  • Quantifying the “known unknowns and the unknown unknowns”

  • What risk metrics really add value to an organization? 

Speakers: 

Glenn Labhart, Partner, Labhart Risk Advisors
Manuel Ciobanu,
Principal Quantitative Risk Analyst, NRG

Jie Zhou, Director of Enterprise Management, Exelon
Jim Luft
, Director – Risk, Energy Transfer


 

5:00 - 6:00

Networking reception

October 25, 2019

8:00 - 9:00

Continental Breakfast

9:00 - 9:30

Presentation: Asian energy market overview - Spotlighting hedging difficulties in immature markets

Speakers: 

David Rao, VP Product Development, ENUIT
Robert Balinski, Director of Services, ENUIT

9:30 - 10:00

Presentation:  The intersection of compliance and risk

Managing compliance as a component of your organization’s risk management strategy, including:  Managing energy trading compliance issues, data analytics and its role in monitoring trade activity and how to build an effective compliance program to mitigate energy trading enforcement risk.

Speakers: 

Frank Hayden, Vice President, Trading Compliance, Calpine

10:00 - 10:30

Presentation:  Alternative assurance for the energy market. 

Speakers: 

Pat McKinnon, Managing Director – Americas, TruMarx Data Partners – Comet Platform

10:30 - 11:00

Networking Break

11:00 - 12:30

Session 5:  Digital transformation and risk

How will technologies like blockchain, robotic process automation and AI change the risk environment?  What are the risks around cybersecurity?

  • AI, RPA and Machine Learning: Digital transformation technologies are reforming the risk profile for Energy Trading companies. As Robotics Process Automation, Blockchain, Artificial Intelligence and Machine Learning become embedded in the energy trading lifecycle, process efficiencies are gained, and new and compelling risks are introduced.  This talk will discuss the balancing of human verses machine risks, case studies of digital transformation gone wrong, strategies for recovering from missteps and the threat of displacement of accountability.

  • Blockchain in action:  Ticketing-based services generate millions of documents from service order to final payment (order-to-cash). The majority of these services are still processed manually at a high cost. In this presentation, Rana Basu, Ondiflo's COO, introduces a solution developed to automate the water hauling ticket approval by integrating tank level data in smart contracts.  He will also discuss how blockchain is being used in trading, and the challenges and opportunities that risk professionals need to be aware of, including the need for standards to achieve quick on-boarding of the various participants in the network and the features of a permissioned blockchain-based solution to be legally enforceable.

  • The risk and rewards of big data:  The amount of data available to an organization is growing exponentially.  How are companies turning this data into dollars through enhanced visibility into customer behavior?  What are the operational challenges of capturing and transforming this data into usable digital assets that add value to your organization?  How can companies minimize financial and cybersecurity risks inherent in data-driven operations?

Speakers:

Amber Storey, Director, Veritas Total Solutions
Rana Basu
, COO, Ondiflo
Cade Burks
, Chief Digital Officer, Big Data Energy Services

Howard Walper, President, Alpha Insight LLC

12:30 - 1:00

Break / Working Lunch

1:00 - 2:00

Session 6 (Panel discussion): New industry voices

Hear how energy risk professionals who have recently entered the industry are viewing the latest market challenges and navigating today’s business environment.

Speakers:
Fernando Rangel, Senior Risk Analyst, Shell
Emma Brons
, Credit Risk Analyst, BP

Matthew Montpetit, Senior Credit Manager, NRG

2:00 - 2:30

Presentation - Keynote - The Art of Risk

Speakers:

Marco Valle, Risk Manager, Shell

2:30 - 2:45

Closing comments

Conference concludes