SSE Streamlines Risk Modelling with Lacima’s Integrated Solutions

How SSE paired Lacima Trader with Lacima Analytics for rapid analysis of their risk modelling framework with minimal resource commitment

The Project

Looking to optimise risk management and streamline the testing and validation of new ideas and scenarios, SSE utilised Lacima Trader alongside Lacima Analytics to drive efficiency and enhance risk assessment across their operations.

The Client

SSE is one of the UK’s leading energy companies, specialising in the generation, transmission, distribution, and supply of electricity and gas, as well as energy trading, renewable energy development, and sustainable practices. As of 2024, SSE serves energy supply and provides grid-connection to approximately 5 million customers. They manage a diverse portfolio of thermal and renewable power generation assets, financial contracts, and gas storage, and have additional interests in electrical and utility contracting, data centres, and telecoms.

The Challenge

SSE needed a comprehensive solution to manage ‘at risk’ and credit risk metrics, portfolio valuations, greeks, limits and breaches, and stress testing for their diverse portfolio of thermal and renewable power generation assets, gas storage assets, and financial contracts. The solution required flexibility to handle the complexity and variety of these assets.

In addition to this strong foundation in analytics and risk assessment, SSE required a flexible solution to quickly test and evaluate risk model parameter changes and their impacts, without committing extensive resources to unproven ideas.

SSE also sought the ability to integrate data outputs into their existing technology ecosystem to achieve a superior, cohesive risk reporting framework.

The Solution

Rapid Idea Assessment and Validation with Lacima Trader
SSE employed Lacima Trader to quickly and easily validate and refine new model parameter changes with minimal resource commitment. By using Lacima Trader for initial evaluation of the potential changes, the team can determine the most promising ideas before configuring them within Lacima Analytics for more comprehensive portfolio-level analysis and modelling. This streamlined approach enabled SSE to test multiple scenarios efficiently, helping them make informed decisions without over-investing time and resources in unproven ideas.

Comprehensive Risk Management with Lacima Analytics
For in-depth risk management and analytics, SSE utilised the full suite of modules within Lacima Analytics. This suite includes tools for Earnings-at-Risk (EaR), Value-at-Risk (VaR), portfolio valuation, credit risk (PFE), limit and breach monitoring, and stress testing. Applied across their power generation assets, financial contracts, and gas storage, Lacima Analytics has become an integral part of SSE’s risk management strategy, enhancing their ability to assess, understand, and mitigate their risk exposure.

The Outcome

Through the adoption of Lacima Trader alongside Lacima Analytics, SSE has achieved advancements in both the speed and flexibility of new idea assessment and risk management accuracy. By integrating with SSE’s technology ecosystem, Lacima has enabled a streamlined flow of valuation and risk data into upstream business reporting solutions, fostering better decision-making and supporting SSE’s broader business intelligence objectives.

Lacima’s solutions have provided a clear, efficient approach to exploring the effect of risk model parameter changes while reinforcing SSE’s risk management processes, and the integral role they play in SSE’s risk management framework.

This case illustrates how Lacima’s solutions deliver value beyond standard analytics, offering clients an adaptable, powerful framework for managing complex energy portfolios and innovating in risk management practices.