Re:

to discuss when we get a moment=20
---------------------- Forwarded by Mike Jordan/LON/ECT on 22/10/2000 15:41=
=20
---------------------------

Fernley Dyson
20/10/2000 11:37
To: Mike Jordan/LON/ECT@ECT
cc: =20

Subject: Re: =20

Excellent - we should give it as much profile as possible and ensure that o=
ur=20
'agency' offices read it - it would be good to get it out in advance of=20
issuing the revised authorised traders list. Will you be refer to this at=
=20
your offsite next week?

Thanks

Mike Jordan
19/10/2000 19:30
To: John Sherriff/LON/ECT@ECT
cc: Fernley Dyson/LON/ECT@ECT=20

Subject:=20

John

After much debate - Jackie and I agreed on the following wording to cover t=
he=20
full text - are you comfortable with wording ? If so, would you like it as =
a=20
separate Globalflash or part of the next weekly Globalflash ?

Mike

Enron must complement its origination and trading capabilities with the=20
ability to control and report on all transactions within its portfolios=20
efficiently and effectively. Summarised below are the highlights of our=20
fundamental risk management standards which we must comply with to meet the=
se=20
objectives.

These standards are a key part of the core discipline for all trading staff=
-=20
both Commercial and Commercial Support - and you should review them=20
carefully. If you would like to raise any specific questions, please follo=
w=20
up directly with Mike Jordan on extension 34703.

John Sherriff

RISK MANAGEMENT CONTROLS IN A TRADING ENVIRONMENT

To manage operational risk in a trading environment Enron has designed and=
=20
implemented operational control standards. These standards, which are commo=
n=20
for all businesses, aim to prevent errors and inaccuracies and ensure the=
=20
timely recording of trading transactions.=20

What standards does Enron have in place?

Enron has six fundamental standards for risk management that cover:
- Recording transactions
- Reporting daily profit & loss and risk positions
- Confirmation and execution of transactions
- Settlements with counterparties
- Risk management and settlement system information reflected in the genera=
l=20
ledger
- Implementation of business and control infrastructure

What else is important when controls are implemented?

Implementing segregation of duties within the trading environment ensures=
=20
that no individual has control over all phases of a transaction. This=20
allows incompatible functional responsibilities to be kept separate,=20
specifically:
- Authorization and execution of transactions
- Recording and performance of transactions
- Monitoring and review of trading activities=20

Why do we need to standardised controls?

To assimilate new or build existing commodity businesses Enron needs to be=
=20
nimble and responsive. A robust and stable control process can be duplicate=
d=20
or flexed quickly and confidently, providing scalability and the capability=
=20
to assess and manage operational risk.

How do we measure successful control?

By identifying and reporting metrics for all standards we build an=20
understanding of compliance across all businesses and seek continual=20
improvement. This compliments the qualitative cross-checking process=20
facilitated by communication between Commercial, Risk Management Operations=
=20
and RAC.

The control measurement process will be part of a global initiative across=
=20
all commodities and locations.

Where can you find details of our fundamental standards?

Mike Jordan =01) Head of Risk Management Operations for Enron Europe
Fernley Dyson =01) Chief Accounting Officer for Enron Europe

- Original one pager