The CTRM Blog

CommodityPoint has issued a new Technical Briefing Note on Risk Optimization highlighting the Hyper Rig Risk Optimiser product. The TBN may be downloaded from the Reports and Articles page of this blog.

In an ideal world, running stochastic risk metrics such as full blown Monte Carlo Value at Risk (VaR), Earnings at Risk (EaR), portfolio stress tests or, other simulations, would be performed both on demand and in real time for complex commodity portfolios. Unfortunately however, this vision has proven to be elusive with most firms resorting to the use of overnight ‘batch’ jobs lasting hours to provide an accurate assessment of the day’s starting position and then utilizing parametric risk metrics during the trading day to approximate changes in position.

In part, the problem facing commodity trading firms is one of multiple different systems utilized to capture trades and track positions but it is also, in part, due to an inability of almost all commercially available Commodity Trading and Risk Management solutions to actually perform stochastic risk calculations on even relatively small commodity portfolios in a reasonable time frame. While many CTRM vendors claim such capabilities the truth is that many users have discovered that such claims cannot be met in practice.

In an era of a sharply renewed emphasis on risk management, faster market speed and increased volumes of data, a new approach to providing real-time stochastic risk assessments for commodity portfolios is required and Hyper Rig has devised a solution. The Hyper Rig’s suite of products, including its Risk Optimizer, are designed, using innovative methods, to both extract, in real-time, the data required to perform risk optimization from a plethora of different systems and databases and, to allow users to conduct stochastic risk metrics and analysis on that data on demand in just seconds or minutes and certainly not hours.

The Hyper Rig product suite doesn’t require users to engage in expensive and risky CTRM system replacements as it simply overlays and enhances the systems already utilized in house thus extending their usefulness and decreasing their cost of ownership while providing the tools that traders and risk managers require to make better and more timely trading decisions.

To read the rest of this TBN – Please download it.

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