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CommoditiesMarkets, Performance, and Strategies$
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H. Kent Baker, Greg Filbeck, and Jeffrey H. Harris

Print publication date: 2018

Print ISBN-13: 9780190656010

Published to Oxford Scholarship Online: March 2018

DOI: 10.1093/oso/9780190656010.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 16 October 2021

Energy Risk Management

Energy Risk Management

Chapter:
(p.469) 24 Energy Risk Management
Source:
Commodities
Author(s):

Thomas Barkley

Publisher:
Oxford University Press
DOI:10.1093/oso/9780190656010.003.0024

The backdrop of rapid growth of worldwide energy consumption and increasing concerns about global energy sustainability and environment protection, as well as an increasing uncertainty of commodity prices, require energy companies to use derivatives to hedge against risks related to energy trading. Over time, this situation has led to a more important role for energy risk management as part of a company’s core business operation. This chapter discusses the primary financial instruments used in the energy sector and risk management for energy companies. It reviews the application of several important quantitative methodologies, including Value at Risk and its variant risk metrics, to measure market risk. The chapter also examines credit risk measures and credit risk migration. Lastly, it discusses liquidity risk, operational risk, and legal risk. Overall, the chapter focuses more on the risk the commodity producer/deliverer faces and less on the end user.

Keywords:   energy risk management, Value at Risk, risk metric, credit risk, liquidity risk, operational risk, legal risk

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