Banks and hedge funds have shied away from trading electricity due to fear and ignorance of the physical nature of the market. But, as Todd Bessemer of Accenture points out, financially settled contracts can avoid the complexity of physical delivery and...
Environmental risks are increasingly being recognised as important financial issues, but the markets are still some way from rewarding companies for good environmental performance, as Kevin Foster discovers
The development of new models that describe the real dynamics of energy prices have to take into account the behavioural aspects of market players. The problem is how to quantify these aspects. Maria Kielmas reports
One of the reactions to recent energy trading difficulties has been a shift away from speculative activities towards portfolio optimisation, but what does the term really mean, ask Tim Essaye and Brett Humphreys
What made headlines before is now becoming everyday news: energy companies are scaling back or leaving energy trading. Some industry observers are emphasising the shift to ‘trading around assets’. Anne Ku investigates just what this means
Swiss Re's Pablo Koch Medina, Frank Krieter and Stephan Schreckenberg highlight the key features and main limitations of internal risk models for insurers.
Brett Humphreys explains how to measure and manage margin risk, an often-overlooked – yet often-significant – risk exposure
Aluminium manufacturers have long used sophisticated hedging and risk management techniques to protect against fluctuating metal prices, yet they have only recently looked at transferring these skills to power risk management. David Wilson reports
The expression ‘this month’s once-in-a-million event’ has become a cliché in finance. From the sudden bankruptcy of investment-grade companies to 5% daily moves in foreign exchange markets, we’ve seen them all. Rare events – which for practitioners...
Conflict in the US and growth in Europe marked another turbulent year for energy exchanges. Kevin Foster casts an eye back over 2002
Brett Humphreys takes the guesswork out of determining how many simulations are needed to calculate value-at-risk
A turf war between Atlanta’s IntercontinentalExchange and the New York Mercantile Exchange reveals a shift in the traditional role of over-the-counter brokers and exchanges, finds Catherine Lacoursière
Deutsche Bank has committed to providing bid and offer prices on Russian rouble futures for the Chicago Mercantile Exchange (CME), in a move designed to capitalise on revived interest in Russia by Western investors. It is the first time the contract has...
To understand how much value can be lost from a position in the energy markets, we need to use measures other than value-at-risk. Brett Humphreys discusses methods for creating effective stress tests