Solutions

Risk Analytics

 

Complete valuation, optimisation and risk management solutions for Middle Office. See behind the numbers, one smart application.

Your Questions

Why has my risk metric changed since yesterday?

Where are the risk ‘hotspots’ out of our hundreds of curves traded and thousands of trades?

Does my risk profile change with an extra potential trade and by how much?

How can I see a single view of risk across my entire energy and commodities portfolio when the trades are held in different deal capture systems?

Is there an alternative to ‘off-system’ work arounds for structured trades not handled by my current system?

How do I reduce the ‘key person risk’ of our current in-house solution?

Now more than ever, effective risk management and the ability to respond to valuation challenges and portfolio optimisation opportunities, are prerequisites for the profitability of organisations that deal across energy and commodities.

Market and credit risk teams require deep insights into the drivers of the risk faced by their businesses. It is no longer good enough to just ‘report’ a risk number. Shareholders and regulators require deeper analysis into the key drivers of the risk and explanations of day-on-day changes. Risk managers require scenario analysis and stress testing the inputs of the calculations to keep on top of the risks and how they are changing.

Our Solution

Act with confidence with Lacima Analytics.

Lacima Analytics is the leading industry acclaimed single application for multi – commodity, multi-geography and multi-currency valuation, optimisation and risk management across a whole portfolio of physical assets & complex financial contracts. Power, gas, LNG, crude & refined products, ags, metals – we cover it all.

Whether you seek simple models to value, optimise and report risks for standard contracts, or the most sophisticated models and techniques for complex assets and contract types, Lacima Analytics covers all your needs taking into consideration the unique behaviour of commodity and energy prices, the complexities of financial hedge contracts, and the operational constraints of physical assets.

Key reasons that our clients continually rank Lacima Analytics as the world’s number one energy and commodity risk engine:

  • Benefit from a complete solution across Middle Office in a single application, able to report multiple market and credit risk metrics including: Value-at-Risk (VaR), Monte Carlo VaR, Historical VaR, Earnings-at-Risk, Cash Flow-at-Risk, Gross Margin-at-Risk, Potential Future Exposure, and Potential Collateral Exposure
  • Consolidate and aggregate a ‘global VaR’ from multiple deal capture systems
  • Get full visibility into the sources and drivers of risk
  • Enables you to focus on value adding activities like explaining the numbers to senior management and traders
  • Employ a solution that is designed to grow as your business expands, including into new commodities and geographies
  • Works seamlessly with all C/ETRM and other key operational systems
  • Quick and cost-effective implementation – no need to replace any existing deal capture systems

 

The Features

  • Covers all markets you operate in including power, natural gas, LNG, crude and refined, ags & softs and metals & mining
  • Provides deeper insights into the makeup of your portfolio VaR number with the ability to drill down and report VaR into multiple groupings: commodity, geography, market, desk, strategy, trader, risk factor and contract
  • Helps you understand key portfolio risks through incremental and component VaR reports detailing how positions contribute to the overall VaR and the effect if they were removed
  • Enables you to understand why your VaR has changed day-to-day by calculating VaR attribution reports for daily reporting processes
  • Allows users to perform enterprise wide risk calculations taking into account physical assets and financial contracts
  • Allows you to perform stress testing on market prices, positions (add/remove trades or ‘what if trades’) and model parameters (e.g. change correlations, mean reversion factors, volatility functions)
  • Achieves consistency between front and middle office by using the same analytics numerical engines as the Lacima Trader tools
  • Provides auditability and user management controls including full audit trail, performing past risk runs using same input data and model configuration and user groups configuration to allow add/edit/view access.
  • Integrates with Limit and Breach module, a flexible, integrated limit management framework with built-in workflow
  • Scales to future requirements as complexity in traded contracts increases and new markets are entered. Easily turn on extra modules that address; for example, cashflow based metrics (Gross Margin-at-Risk, Earnings-at-Risk, Revenue-at-Risk, and Profit-at-Risk), credit risk, potential collateral exposure, power plants (thermal, wind, solar, batteries) and LNG valuation and optimization
  • Fully automates for outside of hours running of analysis
  • Provides flexible reporting options with data structure documentation which allows easy development of BI reporting options (e.g. Tableau and Power BI) and user defined reports and functions
  • Gives full transparency with published analytics methods readily available