Course description
Front to Back Office: Trading Controls, Risk Measurement and Modelling is a VIRTUAL classroom course presented by the energy training experts at Mennta Energy Solutions.
This fascinating course will give delegates a thorough understanding of best practice controls to be applied in commodity trading activities. It also offers in-depth coverage of systems requirements, credit risk management best practices, risk and performance measurement, and a strong focus on capital adequacy issues. Subject areas covered include recent developments in regulatory and legal compliance, and ethics.
This virtual solution is comprised of four live instructor-led sessions hosted on state-of-the-art training software with video, audio, chat, live polls, competitive quizzes, breakout sessions and much more! See recorded demonstrations here. The program will also include several self-study assignments to maximize the time with the instructor.
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Content
Prerequisite to Session 1 Self-Study Assignments: 2.5 Hours Self-Study
- Introduction to Trading Risk Control (2 hours)
- Why is risk control important?
- Key legal requirements for risk control
- Groups involved in a trading organization (front, mid and back office) and their involvement in risk-taking and risk control
- Major trading risk categories – market, operational, liquidity, credit, legal, reputational, systemic
- How companies control specific risks
- What risks can be measured and the tools used
- An independent risk management function
- Pre-class case study reading (30 minutes)
Virtual Instructor-Led Session 1: 2 Hours Live
- Market risk
- Different types of market risk
- Measurement methods
- Risk limits
- Operational risk
- Sources of operational risk
- Mitigation techniques
- Regulatory and legal requirements
- Additional risks to control: systemic, liquidity
- Discussion of key industry case studies (pre-reading for class)
Prerequisite to Session 2 Self-Study Assignments: 30 Minutes Self-Study
- Pre-class case study reading (30 minutes)
Virtual Instructor-Led Session 2: 2 Hours Live
- Developing trading and risk management controls
- Risk management control structure and the chain of command
- Risk tolerance
- Understanding types of risk, and setting trading authority limits and procedures
- Trading room controls
- Effective risk management systems
- Best practice guidelines
- Regulatory and legal compliance
- Key regulatory organizations and their requirements
- Sarbanes-Oxley
- Dodd-Frank Act
- Other key regulations and their implications
- Trader ethics
- Definitions – market manipulation and misconduct
- Shades of gray
- Organizational perceptions
- Ethics in energy trading
- Discussion of key industry case studies (pre-reading for class)
Prerequisite to Session 3 Self-Study Assignments: 2 Hours Self-Study
- Understanding the Value at Risk Concept (2 hours)
- What is VAR?
- The uses and benefits of VAR
- Risk measurement and key VAR parameters
- Choosing and using certain calculation techniques
Virtual Instructor-Led Session 3: 2 Hours Live
- Market price risk management and controls
- Foundations for risk measures
- Risk modeling methods
- Types of stress testing
- Stress testing versus “at risk” measures
- Price volatility issues
- Application and strengths/weaknesses of value‐at‐risk
- Other uses of value‐at‐risk
- Risk adjusted performance measurement
Prerequisite to Session 4 Self-Study Assignments: 2 Hours Self-Study
- Introduction to Credit Risk Management
- The difference between credit risk and market risk
- Internal credit risk ratings and agency credit risk ratings
- Credit risk limits and the significance of breaching those limits
- Management’s role in the credit risk management process
- Portfolio-level credit risk monitoring
- Key methodologies used to measure credit risk
- Methodologies and products used to manage and hedge credit risk
Virtual Instructor-Led Session 4: 2 Hours Live
- Credit risk management and controls
- Calculating credit exposure
- Portfolio credit risk measurement
- Forward‐looking credit models
- Determining credit thresholds and limiting exposure
- Key measures of capital adequacy
- Cash-flow-at-risk
- Impact of margin on working capital
- Capital adequacy framework
- Key issues with credit and collateral annexes
- Credit mitigation and use of credit derivatives