Accenture Commodity Trading and Risk Management Services. Helping companies achieve high performance in commodity trading operations

Transcription

1 Accenture Commodity Trading and Risk Management Services Helping companies achieve high performance in commodity trading operations

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3 Companies today operate in a fundamentally changed global business environment. As executives in the energy, utilities, chemical, metals, mining and forest products industries contemplate ways to achieve high performance in their trading operations, they do so considering the global business world that has been fundamentally changed by the credit crisis and global economic downturn. In this new world, companies must also contend with continued volatility in commodity markets volatility that shows no sign of abating. The new economic and commercial realities are forcing trading and risk management organizations to reexamine conventional ways of doing business. The financial crisis has underscored the notion: to achieve high performance in today s complicated and evolving environment, companies need to develop more effective market and credit risk management capabilities. To enhance their capabilities, companies will need to rethink and reassess their operational and financial performance, business strategy and incentives. And they will need to reevaluate whether they are leveraging technology effectively in their trading operations. Accenture Commodity Trading and Risk Management Services can help. Accenture draws on its extensive business consulting, systems integration, technology consulting, outsourcing and industry skills to offer solutions for managing risk, lowering costs and monetizing opportunities in an uncertain and volatile business environment. We bring the strategists, front-, middle- and back-office analysts, change managers, functional architects and technical architects necessary to help energy, utilities, chemical, metals, mining and forest products companies shape new opportunities for growth in their trading organizations. 3

4 Accenture Commodity Trading and Risk Management Services provides a comprehensive range of solutions. Accenture provides services designed specifically for commodity trading organizations. We apply our skills across the front, middle and back offices related to strategy, operations, information technology and people. In our work with clients, we focus on creating, embedding and enhancing systems, processes and strategies that help deliver tangible value, such as lowering risk and accelerating projects. We employ an agile methodology that promotes confidence with our clients through structured delivery while accommodating the dynamics of a trading environment. Our services are grouped broadly into three offerings: Trading operations improvement Trading platforms and related IT Back-office managed services 4

5 Trading operations improvement The building operational excellence offering helps to improve the profitability of the trading operation and the integrated enterprise. By leveraging our commodity trading and risk management services, assets and tools, Accenture collaborates with clients to address such areas as: Operating model optimization across manufacturing, supply and trading Optimize the operating model by streamlining supply chain and asset operations internally and monetize an organization s position in the marketplace outside its own asset network. Risk management and financial control Establish effective risk management capabilities for market, credit and operational risk that include policy, processes, tools and stress testing. Manage the portfolio risk exposure, set risk limits and control risk. Also enhance financial controls to settle accounts for trading activities accurately and with sufficient information. Compliance, surveillance and governance Strengthen and more effectively integrate compliance and trading surveillance within daily operations with improved systems and tools that mitigate risks and protect against loss. Implement regulation and compliance tracking systems. Integrate compliance and governance via one-hub tracking of compliance position(s). Redesign and rationalize governance approaches to trading operations with improved oversight structures, systems, standards, policies and process across all trading desks throughout the entire enterprise. Facilitate more efficient governance through process simplification and standardization, ultimately taking out costs and introducing greater flexibility to respond to market conditions. Organization performance and talent management Improve workforce performance, align workforce and corporate strategies, redefine the role of the human resources function and improve collaboration and knowledge management. Assist with talent management strategy and management, including talent acquisition, learning, motivation, performance management, and the tools and processes needed to increase productivity, skills and retention with the most critical workforce segments. Process standardization and simplification Streamline and automate front-toback trading activities via straightthrough processing. Consolidate trading, origination and risk-control activities under a common governance structure and risk policy framework. How do we protect and realize greater value across manufacturing, supply and trading? How prepared are we in the event of...? How can we simplify and standardize trading processes? How can we further leverage technology to support our business strategy and streamline operations? How do we improve trading surveillance and oversight? 5

6 Trading platforms and related IT The building effective information technology offering helps companies to improve the business value realized through information technology (IT). Accenture collaborates with clients to address such areas as: Information technology delivery model Improve the IT delivery model through all levels of the organization from strategic planning to project delivery to support. Identify bold, valuecreating approaches to apply IT as a strategic asset a source of both operational excellence and competitive advantage. We bring boardroomrelevant criteria to IT investments and help businesses to think bigger about IT s ability to improve operating results. Data management and analytics Address how an organization manages data across its entire life cycle so that data is available, accurate, complete and secure across the enterprise and with business partners through technology, processes and people. Develop analytics by coordinating, across the enterprise, the collection and analysis of business-critical information by using integrated, leading-practice approaches, and intelligent systems integration, and establishing processes and governance to enable information to be accessible when needed. Next-generation architectures Provide Accenture s thought leadership in defining the future application, integration, data, technical and infrastructure architectures for commodity trading and risk management solutions to the chief information officer and organization to help apply their investments around service-oriented architecture and cloud computing. Application and infrastructure rationalization Apply a holistic approach to the rationalization of applications and tools that accumulate in organizations to streamline complexity, reduce unnecessary duplication and optimize IT infrastructure. Activities may include server consolidation, operating system migration, storage rationalization and database optimization. Rationalize entire application portfolios to decide which applications are needed, which should be replaced and which should be enhanced. Testing and quality assurance Work with organizations to optimize testing and quality processes; provide the appropriate guidance that defines and applies formal, repeatable testing techniques; and build and refine testing skills and functionality. Provide assistance with ongoing testing needs, such as regression testing. Low-cost application and infrastructure maintenance Provide production support and application maintenance services, and if desired, additional services such as application testing, enhancements, upgrades, comprehensive application development or legacy modernization. Accenture also offers a complete and integrated set of managed infrastructure services, encompassing all infrastructure functions from network access to desktop management to remote technology support. Automation through packaged and custom software Leverage technology to automate new approaches and processes efficiently such as exception-based processing as well as establish the necessary skills to enable the technology. This area can entail a variety of packaged and custom software tools. How can we better align information technology with the business? How do we realize more value from our data? What are the network infrastructure implications of executing high-frequency trading? What should our application architecture and roadmap be, given the business strategy and available technologies? How can we improve the effectiveness and repeatability of our testing activities? How do we lower information technology support costs? 6

7 Back-office managed services The back-office managed services offering helps companies lower costs while sustaining and improving service levels across back-office functions. For example, we can provide outsourcing services for application management for a single application, group of applications or an entire portfolio of software applications. Accenture also offers a spectrum of on-demand custom outsourcing services and a complete suite of finance and accounting business process outsourcing (BPO) services. Accenture collaborates with clients to address such areas as: Application outsourcing Make substantial contributions to the effectiveness of an organization through the promotion of a tighter focus on strategic systems development while improving service to users and better managing costs. Through application outsourcing, we industrialize application development, maintenance and support to align IT investments with an organization s strategic imperatives, and can potentially reduce costs by as much as 50 percent. Finance and accounting business process outsourcing Reduce costs, improve cash flow and increase predictability and flexibility. Our capabilities span a full suite of finance and accounting BPO services across the entire finance value chain. Infrastructure outsourcing Create a more cost-effective and responsive IT infrastructure which promotes service stability and reliability, and enables rapid response to changing market and business conditions. How do we improve operations while lowering cost? How can we establish and sustain a shared service model for back-office services required by each of our trading desks? How can we establish and benefit from a single point of accountability for completing end-of-day processing across our trading locations? 7

8 Delivering demonstrable results to achieve high performance Accenture Commodity Trading and Risk Management Services helps companies achieve business value in several ways: Reduced cost Our solutions help lower costs through lower operating expenses, identification of cost takeout opportunities from operations and information technology, improved procurement of feedstocks and efficient management of trading capital. Avoidance of exceptional losses Exceptional losses may be avoided through improved inventory management, intraday buy-versusbuild assessments, and recognition and preparation of catastrophic risk events. Identification and management of hidden risk Using our innovative methods, such as stress testing, we help clients identify and manage hidden risk and prepare for the future. Improved governance Governance is enhanced by reduced lag time of information dissemination, compliance with risk-reporting directives and faster response to regulatory requests or changes. Stabilization of profitability Profitability may be stabilized with approaches such as the use of the spot market as a strategic tool to mitigate profit margin, application of marketbased pricing, use of alternative sales channels and cleared exchanges, and effective management of liquidity risk. Increased revenue More robust risk management capabilities may help increase revenue through new revenue streams, faster response to market opportunities, talent management, and better asset and supply chain optimization. 8

9 Figure 1. Serving a range of business models. The Accenture Commodity Trading and Risk Management Services offerings and assets are applicable across the spectrum of business models, such as: Asset optimizers, which generate earnings primarily through asset operations. Global traders, which profit from entrepreneurial trading. Integrated enterprises, which are organizations that are a combination of asset optimizers and global traders. Asset centric Asset optimizers Integrated enterprises Global traders Trading centric Capability Energy Utilities Chemicals, metals, mining, forest products Supply focused Maintain a ratable outlet for physical and contractual assets through marketing fuels, gas, power, etc. Optimize asset portfolio participate in highest-value markets Focus on physical markets Optimize supply and delivery of gas, coal and power Asset-backed marketing and trading of energy commodities Optimize portfolio regionally (i.e., in United States mid-atlantic, United Kingdom, Germany, etc.) Asset-based marketing and trading of metals or chemicals Risk-savvy procurement of raw materials and feedstocks Apply supply chain management excellence to offer operational risk management services to others Asset-based physical and financial business model Engaged in multiple stages of the value chain (e.g., primary production, semi-products, retail distribution, etc.) Large-scale arbitrage and forward trading to optimize not only assets but also the value of market positions Multicommodity and multinational physical and financial operations Structure multicommodity long-term, physical and financial bundles for wholesale counterparties (i.e, utilities, large commodity producers and consumers, etc.) Apply increasingly robust risk measurement and management practices Structure and market over-the-counter risk management products for metals, energy, agriculture, etc. Apply supply chain management excellence to offer operational risk management services to others Emphasis on turning intelligence into considerable market advantage Sophisticated financial and phsyical trading business with a limited or non-core asset base to maintain an insider s view of markets Agility ability to engage in and support new products quickly and confidently Seasoned traders and risk managers Technologically experienced, greater use of bespoke tools to more accurately model and measure the business Global brand/image reinforcing a consistent reputation across markets Business model, culture, risk appetite 9

10 A global leader in commodity trading and risk management When you team with Accenture, you work with consultants who understand your unique challenges. Our understanding of commodity market issues and trends, and applicable technologies and business solutions enable us to deliver innovative yet practical solutions tailored to each client. To help companies address their risk management challenges, we bring a breadth of skills, capabilities and assets, including: Global group of consultants Our consultants include strategists, front-, middle- and back-office business analysts, change managers, functional architects, data architects and technical architects. We support physical and financial trading activity across crude oil, refined products, natural gas, electricity, base metals, emissions and other commodities. Additionally, we have thousands of consultants experienced in the resources industries energy, utilities, chemicals, metals, mining and forest products. Working across major geographies, we bring extensive skills in all industry segments and disciplines. Global industry leaders value our consulting, technology and outsourcing solutions. Experience Our team comprises former traders and risk management executives from a range of markets, investment banks, asset managers and exchanges, as well as Global Association of Risk Professionals (GARP) accredited resources. Knowledge Accenture brings deep industry knowledge in the areas of: Commodities, including power, oil and gas, emissions, metals, and chemicals around the world. Market, credit and operating risk management methodologies, processes and tools. Risk-based performance measures. Market trends and forces, and the initiatives being executed in response. 10

11 Robust assets and tools We have a range of assets and tools to help fast-track our clients trading and risk management solutions, including process models, application architectures and technical infrastructures, vendor and package evaluations, rapid package selection and implementation. Leading processes Our industry-leading processes are based on extensive research and years of industry experience, and focus on the distinctive capabilities that drive sustainable value. Thought leadership As part of Accenture s global High Performance Business Research initiative, we have conducted a variety of general and industry-specific studies on the essentials of high performance. In addition, we have developed several points of view on issues surrounding commodity trading and risk management. Along with experience from client engagements, these research-based insights form the basis for our understanding of high performance in many industries. Relationships and alliances We have strategic relationships with world-leading technology companies that help us deliver excellence to our clients in their trading operations by reducing risk and cost, and accelerating benefits. 11

12 Accenture s commodity trading and risk management assets Our core commodity trading and risk management assets include: Business process reference model for commodity trading and risk management Accenture consultants rely on this proprietary, easy-to-use model to reveal and deliver process excellence for clients. We can leverage the demonstrated industry processes included in the model to benchmark process performance, redesign processes and accelerate delivery. Capability assessment tool Based on the business process reference model, the capability assessment tool provides a wellstructured approach for identifying and diagnosing issues with a client s business processes. The tool provides heat maps and charts that indicate areas of opportunity, as well as consolidates the findings to show the effort and impact associated with each opportunity. Commodity trading and risk management requirements accelerator When initiating a new process and technology implementation at the trading desk, it is critical to outline the project requirements up front. The commodity trading and risk management requirements accelerator tool not only helps accelerate implementation, but also lessens the burden on traders, risk managers and operators to identify and confirm requirements. The requirements accelerator provides the added benefit of serving as a checklist (during the implementation stages), so managers can trace their progress and ensure they are still on track. Commodity trading and risk management release planning framework Accenture developed the commodity trading and risk management release planning framework to help companies divide the deployment process into manageable parts. Our tool provides 12

13 a framework for addressing key considerations before delivery and deployment. It also serves as an important framework for evaluating request for proposal responses, scoping new projects and decision making. Commodity trading and risk management package implementation methodology Our commodity trading and risk package implementation methodology is a collection of leading practices that Accenture has developed based on our implementation experience. By drawing on our standardized processes and templates, we help simplify the integration of complex trading operations. Real-options analysis Accenture understands that the view of a portfolio of physical assets and financial trading requires a rich understanding of the potential risk profile under all market conditions. Accenture s real options methodology allows clients to perform economic optimization of the asset portfolio by incorporating the impact of changes in market prices, volatilities and correlations in valuing the portfolio. This level of insight provides critical information to the client on how to extract more economic value from the portfolio while not degrading the risk profile and operational efficiencies. Stress testing Our approach to stress testing introduces a unique way of better understanding the interrelation and interdependence of risks in a trading portfolio particularly the interdependence of credit and market risk. Accenture s approach to stress testing seeks to understand the nexus of risks that lead to sub-optimal or catastrophic risk for the company by removing the instinct to prepare the portfolio against the last market crisis. 13

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15 The path to high performance in trading As financial markets and economies recover from the global economic downturn, achieving high performance in trading operations will depend on establishing effective market and credit risk management sustained by accurate trading systems areas in which Accenture can help. By understanding the context of your organizational environment, goals and resources, we can help your company make the most of your commodity trading organization. 15

16 Copyright 2010 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture. About Accenture Commodity Trading and Risk Management Services Accenture Commodity Trading and Risk Management Services is an innovative, comprehensive and proven approach to managing risk, lowering costs and monetizing opportunities in an uncertain and volatile business environment. Our global group of consultants includes strategists, front-, middle- and back-office business analysts, change managers, functional architects, data architects and technical architects. We support physical and financial trading activity across crude, refined products, natural gas, electricity, base metals, emissions and other commodities. Our services include business consulting, systems integration, technology consulting and outsourcing. About Accenture Accenture is a global management consulting, technology services and outsourcing company, with more than 190,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$21.58 billion for the fiscal year ended Aug. 31, Its home page is ACC /