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Enron Mail |
In my response to Brent Price on the London Doorstep review I alluded to the
incompleteness of the list of issues. As I outlined, the key point has been identified, but its knock - on effects are widespread and worrying, especially as they concern the Continental Power operation: As of today the most recent finalised DPR for this business was for 11th May, and during the period between then and now we have seen (although in milder form) a repeat of the turmoil on the Amsterdam Power Exchange (APX) that we witnessed in January this year. This is not the time or the market to not know our position. The business is soon to apply for higher limits to accommodate a new transaction on the Polish border. I am bound to comment that based on the state it appears to be in, I would not recommend higher limits. To add insult to injury, as a result of the way this area has been allowed to develop, much of the know-how is in the heads (and spreadsheets) of certain key individuals who it seems are now bound rapidly for EBS. UK Gas seems to have slipped too. Yesterday they reported a $7m loss due to the value of a set of options which were part of a structured deal, booked "off-system" and not revalued for over a month. Worryingly, there seemed to be more time spent arguing over the nuances of a Loss Notification memo, than answering some fundamental questions about why it happened. As a corollary, our process of performing "risk reviews" has become all the more important in identifying holes in our capture and treatment of market risk in the firm. I expect these to play a big part in our effort to stabilise these areas. DP ---------------------- Forwarded by David Port/Market Risk/Corp/Enron on 05/17/2000 10:31 AM --------------------------- From: David Port 05/17/2000 09:30 AM To: Brent A Price/HOU/ECT@ECT cc: Mike Jordan/LON/ECT@ECT, Steve W Young/LON/ECT@ECT, Tani Nath/LON/ECT@ECT, Mark Pickering/LON/ECT@ECT, Joe Gold/LON/ECT@ECT, James New/LON/ECT@ECT, Richard Lewis/LON/ECT@ECT, Michael R Brown/LON/ECT@ECT, Fernley Dyson/LON/ECT@ECT, Sally Beck/HOU/ECT@ECT, Ted Murphy/HOU/ECT@ECT, John Sherriff/LON/ECT@ECT Subject: Re: Project Doorstep Responsibility Matrix Thanks for the summary. I was out last week so apologies if my comments arrive too late. Here they are anyway: 1 Socrates I think it inappropriate for me, or anyone in RAC for that matter, to have primary responsibility for this system/project. But if I were responsible the first thing I would want to know is why this project, which commenced in May 1998, as I recall, is still incomplete, given that it now contains possibly the largest energy derivative position in history, concentrated in a single commodity with a single counterpart. 2 Exhaustive ? It doesn't look like an exhaustive list and I suspect it was not intended to be so - nevertheless we should ensure it is not viewed as such. 3 Symptoms or Causes ? Many of the points look like the former, and addressed as they stand will likely leave us with a Band-aid solution which will drop off when pressure is applied. In fact many of them look like they are a result of Point 5 : "Prioritisation of system projects has resulted in a lack of certain control functionality..." because that explains partly why models get built and forgotten, confirmation errors get made, deliveries go astray and trades get missed - usually bright people are simply too immersed in manual processes to have time to think about changing the way they work. And, for example, when those people move on, as they surely will, the institution has no memory of how to do what they did. I am still amazed at how much we pay relatively senior people to work on Microsoft Excel all day, everyday. 4 Overall I think this is a good exercise if we react to it in the right way. Rather than a list of irritating issues we have to do just enough to justify ticking off, we should use it as a tool to analyse the way we operate. As a hypothesis, if most issues stem from Point 5, then I would ask why has prioritisation of system projects resulted in a lack of certain control functionality ? DP Brent A Price@ECT 05/08/2000 11:08 AM To: Mike Jordan/LON/ECT@ECT, Steve W Young/LON/ECT@ECT, Tani Nath/LON/ECT@ECT, Mark Pickering/LON/ECT@ECT, Joe Gold/LON/ECT@ECT, James New/LON/ECT@ECT, Richard Lewis/LON/ECT@ECT, Michael R Brown/LON/ECT@ECT, Andrew Cornfield/LON/ECT@ECT, Tim Davies/LON/ECT@ECT, Rebecca Millerchip/LON/ECT@ECT, Kevin Sweeney/HOU/ECT@ECT, Pablo Pissanetzky/LON/ECT@ECT, Gail Hill/LON/ECT@ECT, Eric Virro/LON/ECT@ECT, Richard Sage/LON/ECT@ECT, Tim Poullain-Patterson/LON/ECT@ECT, Ian Sloman/LON/ECT@ECT, David Port/Market Risk/Corp/Enron@ENRON cc: Fernley Dyson/LON/ECT@ECT, Sally Beck/HOU/ECT@ECT, Ted Murphy/HOU/ECT@ECT, John Sherriff/LON/ECT@ECT Subject: Project Doorstep Responsibility Matrix Attached is a responsibility matrix for London - Project Doorstep action steps. The listing consists of controls findings, action steps, proposed timelines, and proposed sponsors and responsibility assignments for the completion of the action steps. The purpose of this matrix will be to review and monitor it on an ongoing basis to ensure that items are being appropriately addressed and completed. Please take a moment to review all sections of the listing and communicate any comments or revisions you may have to me as soon as possible. We would like to have a final version of this document in place by May 12.
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