Oil Trading Risk Management

An effective Risk Management function is crucial to the success of any energy trading organisation. In the current environment, it is more important than ever for key staff to have a sound appreciation and understanding of risk management principles and the regulatory and legislative framework within which an organisation must operate. This programme endorses best-practice techniques and thinking from across the industry using hands-on exercises to reinforce learning. Our specialist presenters are practitioners, rather than theorists, and they will show you how to apply the principles covered using our state of the art trading simulator and real-life scenario based exercises. The course encourages discussion and debate around the range of risks associated with oil trading.

Who is this course for?

The course is aimed at staff who are keen to gain a deeper understanding of the key risk management principles and regulatory requirements for a trading organisation, including those who have recently joined a trading organisation (as part of an on-boarding or induction process) and support/functional staff across the trading floor. This is likely to include risk/product controllers, performance analysts, junior traders, IT support and developers, commercial managers, financial controllers, back office staff, compliance and internal control managers, recent graduates.

What will you learn?

By the end of this course you will have:

• Learned the key drivers and causes of risk, specific to an oil trading organisation
• Understood applicable risk management frameworks
• Gained a grasp of practical risk measurement and management tools and techniques
• Understood the life cycle of various trade types and the associated risks at each stage of the cycle
• The ability to communicate positions, exposure and relevant mitigation activities with conviction

Course Content

Overview of Physical and Financial Trading

• Market fundamentals
• Trading terms
• Price exposure
• Hedging instruments used to manage exposure

Key Risks Inherent in a Trading Organisation

• Market risk
• Credit and performance risk
• Operational risk
• Reputational risk
• Regulatory risk

Managing Risks and the Deal Life Cycle

• Identify key risks at each stage of the deal life cycle
• Assess and report, monitor and evaluate the key risks
• Identify and control risk mitigation activities

High Profile Control Failures

• What can go wrong?
• Rogue trader incidents
• Lessons learned and issues highlighted
• Improving the control environment

Governance and Internal Control

• The concept of segregation of duties
• Independence of the risk function
• Oversight, monitoring and reporting activities (including the role and status of the Risk Committee and Chief Risk Officer)
• Organisational structure, reporting lines and financial authorities
• Management responsibilities and accountabilities

The Regulatory Environment

• Key regulators and their powers
• Recent legislation and the implications for market participants, including internal process and procedural requirements
• Sanction: the price of inadequate internal control