Risk Management in Energy Trading
June 5-6, 2023 | Houston, TX
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One of the most valuable agenda contributors and keynote speakers in the GFMI's Risk Management in Energy Trading Conference, June 5-6 in Houston, TX, Jeannie Kim, has provided us with her views on energy trading risk management and agreed to be shared with our network.
The interview discusses the biggest challenges currently faced by energy trading risk professionals, including price volatility caused by various factors and the need for data security. It also covers the challenges of implementing and running ETRM systems, including careful analysis, effective change management, and post-deployment support. The importance of maintaining effective risk programs is highlighted, with annual risk assessments and senior management engagement being crucial. The interviewee mentions a focus on data visualization and business intelligence tools to advance risk management strategies and looks forward to the open exchange of ideas and learning opportunities at the informal and intimate peer-led meetings of financial institutions.
Enjoy reading the interview!
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An Interview with Jeannie Kim - Vice President, Enterprise Risk Management at Mitsui & Co. Energy Marketing and Services (USA), Inc
1. What are the biggest challenges that energy trading risk professionals are currently facing?
Volatility continues to be a challenge for energy trading. In the past 3+ years, COVID-19, the war in Ukraine, numerous weather events, and an increase in renewable energy generation created significant price volatility. Risk managers will need to continue combining a variety of mitigation strategies to contend with the uncertainty.
The pandemic led many companies to adopt new technologies to adjust to remote work and rising costs, but as new technologies are embraced, companies must ensure their data is secure. Training on how to spot phishing emails, database archiving and strong backup and recovery methods can mitigate threats and cyberattacks. Data is the cornerstone to trading and must be protected.
2. What are some of the main challenges with implementing and successfully running ETRM systems?
Implementing an ETRM system is not a magical solution to the company’s front office, middle office and back office woes. Prior to the implementation process, there should be careful analysis of the company’s current state. This includes analyzing all the pain points of the current end-to-end trade lifecycle process, identifying operational risks, and how the internal controls can be enhanced with an ETRM system. There is considerable time, planning, and coordination required for a successful implementation and the pre-work is essential.
Effective change management is critical in casting a vision for the users. While it is important that there is buy-in from senior management, inevitably, the end users will be the ones heavily involved with the creation of test cases, and the burden of testing – all while being responsible for completing their day-to-day tasks. If the end users are not supported well, cannot embrace the system nor act as change agents, then the organization will have a difficult time adopting the new system.
Post-deployment support is necessary in maintaining a successful ETRM system. Having an in-house support team working in tandem with ETRM technical/functional consultants will ensure knowledge is transferred to the in-house team once the consultants roll off the project. The in-house team can document business and technical requirements, provide production support, liaise with the managed services team or ETRM vendor support team for complex issues or bug fixes, and recommend patches and upgrades to the system.
3. How can risk programs be maintained effectively?
An effective risk program will include risk assessments on an annual basis to identify emerging risks and ensure that current procedures and strategies are still valid and sufficient for the internal controls.
Moreover, a risk program where senior management is engaged and shows a consistent approach to governance promotes a culture of risk. This approach can positively affect behaviors and increase accountability and awareness.
4. In terms of technological investment, what areas are you focusing on to advance your risk management strategies? Where, for example, are you planning to invest within the next 3 to 6 months?
Data visualization and using business intelligence tools to develop queries and to build dashboards is a current focus. Data visualization allows traders and risk managers to identify risks quickly, and communicate messages efficiently to key stakeholders to enable informed decision making.
5. In terms of our format, (as you know our conferences are informal and intimate peer-led meetings where all speakers and delegates are senior executives from top financial institutions), how do you see this assisting you with overcoming the challenges your currently face?
This platform allows for an open exchange of ideas and an opportunity to hear different insights from experienced leaders in the industry. I am looking forward to participating and learning from my colleagues to enhance trading risk management practices across the energy industry.
Jeannie Kim
Vice President, Enterprise Risk Management
Mitsui & Co. Energy Marketing and Services (USA), Inc.
Jeannie is a keynote speaker and a panellist at the GFMI's Risk Management in Energy Trading Conference, June 5-6 in Houston, TX. Sessions:
June 5 | 09:15 AM - Keynote Presentation:
Evolve your ETRM systems to better track volatility and subside current failures
- Buying vs building an ETRM system: Know when to spend a little to save a lot
- Consider a customized ETRM system as opposed to a ‘one-size fits all’ approach
- Acknowledge how ETRM’s are running models and managing data inadequately
- Implement an ETRM system that can work to the standards of your business
- Determine how the needs of retail differ from wholesale in ETRM/CTRM systems
Speaker Bio:
Jeannie has over 20 years of experience in the energy trading industry and currently serves as VP, Enterprise Risk Management at Mitsui & Co. Energy Marketing and Services (USA), Inc. (“MEMS”). She oversees Middle Office and ETRM trade support for natural gas, power, crude oil, and renewable energy. Prior to joining Mitsui, Jeannie worked at Reliant Energy and DCP Midstream in various middle office roles of increasing responsibility. She has vast experience in system implementations, building and refining audit controls, and developing and administering risk management framework.
