Credit Exposure Management in a Post-crisis World (1)

The dramatic economic turmoil that swept global markets beginning in the fall of 2008 illuminated the necessity for energy companies to manage and mitigate credit risk. Prior certitudes no longer hold, old thinking has to given way to new, and more advanced credit risk-mitigation tools are urgently required.

Nowhere is the changed landscape more evident than in the world of energy trading. Industry participants say “market risk” controls alone can no longer be the sole measure of good credit risk management. While sound credit risk evaluation is an essential component in determining accurate exposure for the company as a whole, these challenges are further compounded by the ensuing liquidity risk and tightened credit environment.

The critical need to see a company’s portfolio exposure on a real-time basis precludes evaluating credit risk by means of spreadsheets and home-grown software applications. Today’s advanced solutions provide a holistic view of credit, cash advance and all other forms of risk, and are integrated directly with additional needed informational and analytic tools.

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ISDA Comments on Industry Approach to Central Counterparty for CDS & EU Call to Add Regulation

The International Swaps and Derivatives Association, Inc. (ISDA) today made the following comment on industry's approach to the management of counterparty risk and the use of a central counterparty for CDS in light of EU Financial Services Commissioner Charlie McCreevy’s call to add to existing regulation of credit default swaps (CDS).

Full announcement
 

Could the NetDelta solution be a viable alternative to a CCP for OTC credit derivatives? Read related column on NetDelta.