Financial Risk Management

Deregulation in the energy markets, as a common international practice, has increased the level of financial risk that these markets face. Therefore, energy related firms have no will to expose themselves to the financial landscape as it comes. Pro-active actions are more than imperative. These actions may be achieved through the complex process of risk management that quantifies and at the same time minimizes the overall risk. The increasing importance of risk management can be realized through the fact that the energy commodity exchange contracts have shown increased trading activity over the recent years. Topics which are examined include: the energy cycle, risks in the energy cycle, energy commodity exchanges, storage and delivery issues, spot/futures and forward markets, energy commodities, commodity risk management, forward and futures prices hedging strategies. A student successfully completing this course will be familiar with the widely used techniques in the energy sector for managing financial risk. The student may apply into positions, which call for abilities to assess the severity of financial risk, to conduct recommendations to reduce/control risk, to develop contingency plans to deal with an extreme level of risk, etc.