‘Wrong type of liquidity’ spells trouble for energy hedges
Cyclical lull conceals structural shift as liquidity becomes shorter-dated and more flighty
Oil and gas producers are hedging less of their output; airlines have slashed their use of swaps by up to 90%; the over-the-counter commodity derivatives market has shrivelled to one-tenth of its 2008 peak.
On the face of it, these three data points tell a story of risk management in retreat, and appear to bear out warnings that seven years of bank and swaps market reform would deter hedging activity by driving up costs, stunting liquidity and stifling access. The reality is more nuanced.
In
More on Risk management
Energy firms revisit CTRM systems as tech advances
Energy executives mull how to tap into the explosion of new technologies entering the risk space, but systems selection must consider future business needs, writes Yefreed Ditta at Value Creed
CRO interview: Brett Humphreys
Brett Humphreys is head of risk management at environmental markets specialist Karbone. He talks to Energy Risk about the challenges of modelling outcomes in unpredictable times and how he’s approaching the risks at the top of his risk register
How geopolitical risk turned into a systemic stress test
Conflict over resources is reshaping markets in a way that goes beyond occasional risk premia
Energy Risk Debates: the influence of risk culture
The panellists examine different risk cultures and discuss the risk manager’s role and influence in creating a risk culture
Energy Risk reaction: Venezuela and oil sanctions
Energy Risk talks to Rob McLeod at Hartree Partners about the energy risk implications of the US’s control of Venezuelan oil
CRO interview: Shawnie McBride
NRG’s chief risk officer Shawnie McBride discusses the challenges of increasingly interconnected risks, fostering a risk culture and her most useful working habits
Increasingly interconnected risks require unified risk management
Operational risk is on the rise according to a Moody's survey, making unified risk management vital, say Sapna Amlani and Stephen Golliker
Energy Risk Europe Leaders’ Network: geopolitical risk
Energy Risk’s European Leaders’ Network had its first meeting in November to discuss the risks posed to energy firms by recent geopolitical developments
