Strategic Market Risk Management in RightAngle

Leveraging ETRM Solutions for Effective Risk Management

In the ever-evolving landscape of the energy industry – navigating market volatility, regulatory shifts, credit risks, and operational challenges demands a robust set of enterprise risk management capabilities to effectively monitor and address relevant risk factors. Effective risk mitigation is vital for safeguarding financial positions, maintaining compliance and driving well-informed trading strategies.

Depending on the business segment that you transact in, ETRM Solutions such as  RightAngle provide the ability to generate insights and manage trading risks specific to an organization’s needs and requirements via risk reports and analytics, businesses identify, measure, and monitor risks according to their requirements. Integrating with external systems and real-time monitoring is often required to develop a holistic view of the risks. With modern technologies, workflow automation, effective risk mitigation, and decision-making can be managed in near real-time.

Enhancing RightAngle's Functionality: Unlocking Customizations

RightAngle utilizes standard risk management reports including default Mark-to-Market, risk exposure, and current exposure reports. These reports offer limited customization options resulting in a generalized perspective of risk exposures.

Furthermore, the prevailing approach to risk analysis and report interpretation heavily relies on manual efforts by risk analysts. Consequently, potential drawbacks arise, including errors in analysis, delays in identifying risks or not identifying relevant risks, and hindered decision-making due to the lag in obtaining and processing information. These limitations collectively emphasize the need for enhanced customization and automation capabilities within the RightAngle system.

Value Creed has helped extend the software functionality to bolster the out-of-the-box functionalities and optimize the system to deliver customized results and generate relevant analysis aligned with the company’s risk tolerance. We’ve successfully leveraged various 3rd party reporting tools for advanced risk management that can extract data from the system into the data warehouse and run through various digital reporting tools.

Comprehensive Advanced Risk Management Solutions

We focus on the intricacies of market volatilities, credit risk, regulatory compliance, and other complex factors that can significantly impact an organization’s financial performance and stability. It also encompasses comprehensive stress testing, scenario analysis, and enhanced risk quantification methods, such as Value at Risk (VaR) and Conditional Value at Risk (CVaR) by using 3rd party tools like Lacima, as mentioned it can extract data from RightAngle and move it into data warehouse where the data is analyzed and reported via with advanced reporting & analytical tools like Power Bi or Tableau.

Enhanced Mark-to-Market Reports

Comprehensive Risk Exposure Reports

Customized Search Reports

Our range of solutions encompasses enhanced Mark-to-Market reports, both with and without Real-Time FX Conversion, along with comprehensive risk exposure reports and customized search reports. The enhanced Mark-to-Market (MTM) reporting offers comprehensive trade position insights, displaying risk distribution across parameters such as strategy, product, and location. Custom MTM report views incorporate calculated columns for profitability assessment, while the options view incorporates sensitivity metrics for better evaluation of options risks. Real-time FX conversion eliminates manual conversions, ensuring transparent P&L reporting in local currency. Enhanced risk exposure reports offer in-depth views of various aspects, and custom search reports streamline risk adjustment tracking, limit setting, and alert generation. 

Use case: Integrated Market Risk Management and Analysis Report

Our customized Market Risk Management (MRM) and analytical solution is integrated with RightAngle. This integration allows the extraction of essential risk data from primary reports and enhances analysis for liquid and NGL product traders, generating detailed sub-reports based on refined information. While the analysis and reporting are seamlessly executed within RightAngle, an external tool developed by our team undertakes the specialized task of Value at Risk (VaR) computation using the Variance-Covariance method. This tool, although separate, efficiently integrates data from our custom Integrated Market Risk Management and Analysis Report to generate a robust statistical representation of potential financial setbacks during unfavorable market conditions, enriching the comprehension of market risk.

The report efficiently assessed risks by consolidating primary data, providing a holistic risk overview for real-time monitoring and mitigation. It aided decision-making with daily risk insights, enabling analysts and traders to optimize strategies. VaR (Value at Risk) calculation was streamlined using an external tool, projecting potential losses based on historical data. Back-testing was enhanced by comparing projections with historical outcomes, ensuring accuracy. The report offered customizable market risk insights within the RightAngle platform, promoting transparency, compliance, and improved risk management.

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