Energy companies are exposed to many risks. The control and management of such risks are essential components of the company’s management. Depending on the risk, there are automated evaluations and reports or manual preliminary work required.
Often risk management is done in spread sheets based on complex and unclear implementations. Besides that, the market for risk controlling software offers standardized solutions, which mostly require a conversion of the provider’s complete trading and portfolio management systems. Those products demand a great amount of integration effort and are often not able to fulfill the specific requirements of an energy company with its individual profile. Depending on the risk type most of the standard approaches are not satisfying (for example one assumes for the sake of simplicity that the given data is normally distributed). Our claim is to apply realistic and comprehensible models which describe the crucial risk factors.
We provide a risk controlling software which can be integrated easily due to its architecture and has no impact on other systems (PFM, Trading). The software is able to display complex and specific risks and hedge methods and is not tied to any restrictions of commercial spread sheets with respect to model selection and calibration. At this point the software benefits from the longstanding experience of the financial mathematical modeling at the Fraunhofer ITWM.