Advisory & Consulting Services Case Studies

Best practice comparative and advisory project, using Lacima software

Issue

The directors of a publicly-traded retailer of gas and electricity needed investigation and advice on any areas where their company’s risk quantification methods might fall short of industry best practice.

Lacima identified substantial valuation deficiencies, potential financial exposures and opportunity costs caused by current practices, and provided advice on best practice techniques which would substantially reduce this.

Solution

Lacima was selected for this work because of its experience and understanding of the market for credit risk measures in the energy industry.

Of particular interest were the analytical tools developed by Lacima, and their ability to incorporate best practice specific to this customer’s risk management objectives and circumstances.

Benefits

Taking a sample portfolio of the company’s energy contracts, statistics generated using best practice techniques could be compared with the results obtained by the company’s current practices. This highlighted both the scale of the problem and the areas where corrective action could be taken.

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