Energy Trading & Risk Management: Gas price volatility has increased. Relying on antiquated scheduling systems is a recipe for disaster.
Matthew Frye is managing director of OpenLink’s Houston division. He has 20 years of experience in energy markets, including trading, risk management, and operations software. Frye leads a team of business analysts and software engineers focused on dynamic, integrated solutions for energy trading firms. He can be reached at mfrye@olf.com.
The energy industry today faces the most significant trading and risk-management technology integration issues in its history. Even as many companies sit on orphaned or grandfathered software from previous mergers and business initiatives, an expected wave of mergers will further exacerbate the current technology integration problems.
But that’s just the start of the industry’s woes. Aside from increased energy commodity volatility, some companies are using thinly supported applications and relying on manual workarounds.
That’s why energy companies eventually must replace their old systems to effectively manage business growth as well as technology changes. Obtaining a firm-wide risk profile by aggregating a summary of physical and financial metrics of disparate, local systems is an ongoing trend in the industry and a major achievement in energy company risk management.
However, given energy markets’ newfound volatility and the range of exposures that global energy firms must deal with, the reactive, reporting-oriented nature of transaction management practices is in need of serious revision. A new scheduling module can add tremendous strength and value to a company, primarily in the areas of gas logistics and risk management.