ENERGY RISK MANAGEMENT LEPPARD S. Bankowa.pl

A concise and focused report that explains the concept of energy price hedging in an accessible format ideally tailored for busy practitioners.

Specifically written to save time and aid decision-making among busy senior executives and managers and indeed any reader who does not wish to be hampered by unnecessary technical detail while gaining a clear understanding of energy risk management issues.

Illustrates the purpose of energy derivatives, and evaluates their benefits and weaknesses.

More complex, quantitative material is present, but as an optional extra to your understanding appearing only in technical appendices should you wish to deepen your appreciation of the subject and apply it to your own business.

Succinctly explains how energy derivative instruments are constructed and priced, as well how their risk can be understood and managed.

The report equips you with:

The ability to identify risks and their interactions.
Techniques to express these risks clearly.
An appreciation of trading activity and its role in risk management.
A thorough understanding of energy risk management (derivative) instruments and their relationship with physical supply and off take agreements.
Insight into how risk management solutions can be constructed to offer protection against market price movements.
The ability to identify flexibilities in physical operations and recognise their value.

Key to Risk Books new series of executive reports this title is concise, highly accessible and practical offering easily digested chunks of information. And to further aid your understanding it makes extensive use of bullet lists, diagrams, chapter summaries, learning aids and many market relevant case studies that marry the concepts of energy derivatives with recognisable events

Table of contents

INTRODUCTION
Energy risk management
The risk management process
Style of presentation in the book
Chapter review and look ahead

RISK IN ENERGY MARKETS
Financial and commodity markets
Understanding risk
Designing a risk management programme
Chapter review and look ahead

MARKET VALUE OF PHYSICAL AND FINANCIAL COMMITMENTS

Preamble

Commitments, positions and market prices
Position
Market prices

Contracts and mark-to-market quantities

Mark-to-market is valid only for an instant

Chapter review and look ahead

Technical appendix: Interest rates and compounding conventions

PHYSICAL TRANSACTIONS AND BASIC HEDGING INSTRUMENTS

Physical transactions:
Preamble
Physical producer
Physical consumer
Physical transformer
Risk analysis

Physical futures and forwards
Futures contracts
Forwards contracts

Fixed-for-floating swaps

Other types of swap
Floating-for-floating swap
Quanto swaps
Indexation swaps
Other swap types

Chapter review and look ahead

Technical appendix: Futures margining

Technical appendix: Pricing of OTC linear instruments

FUNDAMENTAL OPTION CONCEPTS

The language and nature of options

Why and how are options used by hedgers?

Moneyness and option values

Factors impacting option value