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Best Practices & Financial Risk

This two-day course gives you the integrated framework needed to understand various types of financial risk and how to measure, monitor and manage them. Attendees will get a practical yet rigorous understanding of compliance and regulatory risk, legal risk, systemic risk, operational risk, market risk, liquidity risk and credit risk. In addition, the course covers tools for managing market risk (including Value-at-Risk and stress testing) and implementation of broad-based and specific best practices and trading controls.

Full Course Description
  • Types of market risk and how hedging of outright price risk results in basis and optionality (aka the “Greeks”) risk.
  • Tools used for managing market risk including traditional, position-based tools such as stop loss placement and volumetric limits as well as portfolio-based tools such as mark-to-market, Value-at-Risk, stress testing and fixed fractional money management.
  • Application of statistical theories and how they relate to calculation of Value-at-Risk including assumptions of a normal distribution as well as how non-normal distributions (skewness, kurtosis and stable Paretian distribution) affect VaR calculations, including
  • Extreme Value Theory and GARCH which are specifically designed for measuring the tail of a stable Paretian distribution.
  • The models for Calculating Value-at-Risk including the Linear model, the Delta-Gamma model, the Historical Simulation model and the Monte Carlo Simulation model. A discussion of the pros and cons in the employment of each of the four major types of VaR models is also included.
  • The importance of the implementation of broad-based and specific trading controls in order to reduce operational risk.
  • Credit risk management issues including various credit risk models (such as CVaR, KMV, Z-Score, Econometric, Actuarial and Rating Agency) and credit risk mitigation tools.
  • Portfolio Risk Trading Simulation: Participants will examine market risk of a hypothetical portfolio and familiarize themselves with correlation risk, standard deviations of linear assets, as well as risks of various option positions held within a portfolio.

The course is applicable to all levels of the energy infrastructure, oil, natural gas, electricity and coal. Individuals in every functional area of responsibility in all energy industries whose decisions have significant financial impact will benefit from this program. Managers from areas such as trading, risk management, compliance, human resources, ethics, credit, contracts, operations, marketing, sales, supply and distribution, purchasing, financial and accounting will find the course highly beneficial.

Industry Segment
Course Level
Intermediate to Advanced
CPE Credits
14
EMI Credits
6