AspectCTRM Risk Management

AspectCTRM’s Risk Management Module provides a powerful credit and market risk solution, and an affordable alternative to using spreadsheets. Address a multitude of risks including: price, volume, volatility, quality, delivery counter party, credit and multi-currency, with a full spectrum of physical and financial tools. Gain a powerful advantage over your competitors by performing advanced, complex value-at-risk (VaR) calculations for traders and managers quickly. The second data is entered into AspectCTRM management is able to perform instant analysis and monitor individual portfolios and exposure across the organization. Access VaR for 100,000-deal portfolios in less than 5 seconds. Harness advanced technology built to instantly process and relate prices, volatilities and correlations. Multi-faceted stress testing and fast-action reporting allows you to plug in “what-if” scenarios and instantly calculate profit and loss potential in multiple currencies based on varying pricing factors. Plus discover optimal hedge calculations by viewing futures contracts in a single portfolio versus your overall position.

No other trading system allows for integration of a single risk application that can perform complex computations like these. Aspect clients with solid transaction management platforms are able to integrate this component to complete the cycle and gain real-time risk analysis and management controls not available through other systems.

Key Processes Supported Include:

• Strategy Management
• Curve Management
• Stress Testing: “What If” Analysis
• Market Exposure Valuation
• Hedge Effectiveness

Risk Analysis Supports Confident Decision Making
Throughout The Trade Lifecycle

The market is always influencing the changing requirements of CTRM systems, and AspectCTRM continues to answer by leading the industry with best-in-class functionality for credit, counterparty, market, and price-related risks. A number of influences are in play today due to the fallout from the global recession which is pushing companies to perform higher, reduce costs, create more profits, manage counterparty credit risk more closely, and obtain credit in a tight market. The resulting demand on CTRM systems includes more simulation and “what-if” analytics; supporting financial services companies who are taking more active physical positions – and delivering more proactive risk management capabilities and visibility throughout the enterprise.

Say Goodbye To Spreadsheets -- AspectCTRM Is Affordable To All Size Companies

A series of several studies conducted over the years revealed that 91% of the spreadsheets surveyed contained errors. A simple, honest mistake can cost a company millions in losses, and many have learned firsthand the hard way. What is the use of spreadsheets to manage trading and risk activity costing your business? Waving a spreadsheet at the bank is no longer acceptable in today’s climate when trying to secure credit. Banks require risk reporting from professional systems.

Best Practices In Credit Risk Monitoring

In today’s markets, default risk is higher than ever and maintaining credit worthiness is a challenge for companies of all sizes. You’re watching your exposure while your customers are watching theirs. With AspectCTRM, you gain best practices reports and management to control credit risk exposure and ensure the companies you’re doing business with can pay for services. AspectCTRM delivers all the reports you need, including: Real-time risk exposure reports by counterparty; credit limits and warnings notifications; trade entry preventions for violators; exposure reports for contracted, delivered, invoiced and overdue transactions; over-the- limit and threshold reports and more.

AspectCTRM Allows You To:

• Set, standardize and enforce credit and treasury department policies across the organization.
• Provide credit managers insights into problems before they occur with reports for both physical and financial deals throughout the lifetime of a trade.
• Obtain and manage your own credit worthiness through managing costs effectively and providing banks and customers needed reports through system activity.
• Be notified if a contract requires a letter of credit (LOC), and stores and accounts for bank documents in credit exposure reports.

Real-Time Profit & Loss, Exposure & VaR Reporting

AspectCTRM calculates P&L, exposure and VaR in real time and reports by portfolio, strategy, book, trader, region and more. Like our Trade Management functions, it relies on OLAP reporting tools that are used to continuously update and monitor physical and financial portfolios with exposure reporting intraday and in real-time as market prices are updated. Most vendors perform inter-day risk calculations over many hours which puts AspectCTRM users at an advantage in the market.

Aspect also builds risk reports tailored to individual corporations. For example, various versions of a daily report have been produced that provide a quantitative assessment of the various risks in each portfolio, with drill-down/drill-around functions to allow the identification of relevant events which give rise to sudden changes in exposure and position.

Solution Benefits

• Powerful risk engine puts risk managers in control with a clear understanding of market, credit, settlement and operational exposures.
• Monitor the value of marked-to-market, cash positions, value-at-risk (VaR) and P&L simultaneously with market fluctuations, and as deals are entered and updated. This empowering capability is surprisingly still out of reach for many energy companies using older technology or spreadsheets.
• AspectCTRM supports a daily risk reporting process for Middle Office and Risk Managers to assess activity from the previous trading day. A daily book close process is used to allow the system to automatically calculate daily P&L changes, MTD, YTD, etc. and to snapshot positions by strategy, book, location, trader, etc. A set of standard reports is published to facilitate the daily review.
• Calculate optimum hedging strategies with the Optimal Hedge Calculator, a sophisticated decision support tool for traders.
• Easily manage and group deals into a hierarchy of positions and strategies by commodity, location, counter party, individual or specific trade strategy.
• Customize screens, set security limits on data, and view workflow and audit trails.
• Gain true, real-time accessibility of positions in relation to price, volume, volatility, counter party and currency.
• Easily surf live and historical positions, P&L and VaR like you surf the Web.
• Set workflow parameters and automatic notifications to align with business processes and provide visibility and audit trails for management.
• Reduce unexpected trading losses, and blind spots in company-wide exposure throughout the trading day.
• Gain full support of physical and derivative deals.
• Improve risk-adjusted-return-on-capital, credit ratings with banks, and management of your inventory at risk.
• Enhance cash flow through greater visibility and back-office integration.