Risk Management

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Kiodex to Provide Risk Reports for EnronOnline Users

Commodities traders using EnronOnline will soon be able to seamlessly access parts of Kiodex's Risk Workbench for risk analysis and reporting.

EnronOnline customers will soon have a new risk analysis option when trading commodities online. The Enron site, which has transacted more than $485 billion in commodities products since its launch in November 1999, is teaming up with Kiodex to provide certain functionalities of its soon to be released Risk Workbench to EnronOnline users. Starting in the second half of this year, EnronOnline users will be able to calculate a basic set of risk management reports on transactions in natural gas, crude oil and refined petroleum products free of charge.

"This will give users a better sense of what the inherent risk is in their positions," explains Raj Mahajan, president of Kiodex. He adds that the functionality made available through EnronOnline will include mark-to-market reports and profit-and-loss reports on trades executed on the site. Middleware technology will integrate the two sites and allow for Enron Online trades to be automatically fed into the Kiodex Risk Workbench for analysis. "On an ongoing basis, the information will be fed into the Risk workbench on a real-time basis," says Mahajan.

The Kiodex/EnronOnline arrangement was prompted in part by customer need and convenience, says Mahajan. "Once customers execute a trade, it's already entered into the system," notes Mahajan. "So users don't have to go through the cumbersome process of manual dual entry of those trades-that's where the mistakes are made, that's where it's inefficient. This is a way to lower the amount of work customers have to do to really have best risk management processes."

In addition to the risk analysis available through the EnronOnline site, users can also go directly to the Kiodex site and use the entire suite of Risk Workbench features through a paid subscription for more sophisticated reports, value and risk and other risk analysis. This feature, which will also automatically link transactions from EnronOnline, will be available in the second half of this year, says Mahajan.

While Kiodex is initially targeting the natural gas, crude oil and refined petroleum commodities risk area, in the future the company plans to expand its risk coverage to include areas such as foreign exchange and interest rate risk. Additionally, Kiodex expects to move into newer commodities trading areas such as chemical, steel and bandwidth in the future.

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