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Enron Mail |
Dear Cassandra,
Thanks for the message. I believe it if fully understood by us and the individual risk management groups that explanations must be validated by the traders. Are you in addition saying that your group (who has been very helpful in the past) will no longer help us understand the cause of violations/notifications? To me, this appears contrary to a team spirit attitude, and not reflective of what you and I and Vlady and I had discussed earlier today. Also, we are working toward getting the memos out earlier, and this is a real set back to that process. Thoughts? To: Shona Wilson/NA/Enron@Enron, Michael Benien/Corp/Enron@ENRON, Chris Abel/HOU/ECT@ECT, Daniel Falcone/Corp/Enron@ENRON cc: Veronica Valdez/HOU/ECT@ECT, Sally Beck/HOU/ECT@ECT Subject: Limit Violations and Notifications Process Shona - To share with the others our telephone discussion, the notification template was not my request, it was requested directly by Skilling. I know your group is working hard to meet mangagement expectations, and in accordance with your request below, Market Risk is happy to help you transition into this revised reporting format by reviewing the template prior to your distribution until you are comfortable with the reporting requirements. The new P/L notification limits and limit changes that will be in effect next Tuesday should dramatically decrease the number of notifications, so that should help. It probably makes sense to re-distribute the policy to your business unit controllers and the traders so they understand the policy requirements. Another issue that we discussed yesterday is the source of the violation explanations. These should be provided to you by the head trader of that commodity group. Under the policy, that commodity group manager is responsible for compliance with the risk management policy for the commodities under his responsibility, along with the head of the energy ops for that commodity group. If the traders are not providing these explanations to you or to your counterparts (ops desk head / business unit controller), I'll be happy to send them an e-mail explaining their compliance obligation under the policy. Why don't you talk to each of the business unit controllers, consider whether a process is already in place for this feedback (as I understand it is for Global Products, for example), and if you'd like me to send an e-mail to whoever you're having difficulty with, I will - just let me know who. Our Market Risk desk heads will be happy to review their explanations, but the problem is, they can see whether they're short or long and how the market moved in comparison, but it's the trader that can and should explain why they took a position, whether they're adjusting it based on the market moves, etc.. Let me know what else I can do to help streamline the process. Regards, Cassandra. ---------------------- Forwarded by Cassandra Schultz/NA/Enron on 12/07/2000 09:48 AM --------------------------- From: Shona Wilson 12/07/2000 09:42 AM To: Cassandra Schultz/NA/Enron@Enron cc: Michael Benien/Corp/Enron@ENRON, Chris Abel/HOU/ECT@ECT, Daniel Falcone/Corp/Enron@ENRON, Veronica Valdez/HOU/ECT@ECT, Sally Beck/HOU/ECT@ECT Subject: Re: 12/5 Limit Violations and Notifications - Comments Dear Cassandra, In looking at the comments below there are several errors made buy us, one in the template itself, and some suggestions. At your request, we have started to prepare this in addition to the normal word violation/notification memos and our other work. As you have certain requests and requirements, it would be helpful for someone in your group to review it before it went out to ensure it meets your requirements. Please let me know if this is workable and who the reviewer should be. Thanks, Shona To: Michael Benien/Corp/Enron@ENRON, Chris Abel/HOU/ECT@ECT, Shona Wilson/NA/Enron@Enron, Daniel Falcone/Corp/Enron@ENRON cc: Veronica Valdez/HOU/ECT@ECT Subject: 12/5 Limit Violations and Notifications - Comments I realize this has already gone out, but I see a few errors that we should correct - and actually, I think we should call Skilling and Lay's (and Buy's) assistants (Veronica will handle this) and see if we can just hand deliver to them a corrected version early this morning, e-mail is OK for Ted, David and I. I have a few other suggestions on format/reporting changes as well. The NA Power VaR of $51MM was not 105% over its VaR limit of $50 - that would have been $52.5 to require a report to Skilling, (but if we had had to report it, don't use "WSCC", try to spell out or just don't use) UK Gas's VaR limit is not $4, it's $7.5MM I can't tie in UK Gas' QTD and YTD P/L - shouldn't it be what's on the DPR, adjusted for the portion of the structured derivatives that is gas - call over to that Yeo person and get the info. from them please The 2nd item for NA Gas shouldn't be listed like that as it looks like another violation - the comment re: the VaR increase was mean to go at the bottom under RAC comments The Finance Committe Chairman notification for Agg. VaR is not 100%, it's 115% (notification requirement box) EES had a VaR violation - $7.5 vs. 7 - that is a Skilling level violation Let's have the "Re:" say "Limit Violations and Notifications for December 5, 2000" Let's number them all sequentially rather than starting over at each level Veronica will call you to coordinate re-distribution. Going forward, we need to increase our level of review for these as they're getting a lot of scrutiny given market dynamics and our increasing risk. Thank you, Cassandra. ---------------------- Forwarded by Cassandra Schultz/NA/Enron on 12/07/2000 07:38 AM --------------------------- Michael Benien 12/06/2000 07:08 PM To: Kenneth Lay/Corp/Enron@ENRON, Rosalee Fleming/Corp/Enron@ENRON, Jeff Skilling/Corp/Enron@ENRON, Sherri Sera/Corp/Enron@ENRON, Rick Buy/HOU/ECT@ECT, Karen K Heathman/HOU/ECT@ECT cc: Cassandra Schultz/NA/Enron@Enron, Ted Murphy/HOU/ECT@ECT, David Port/Market Risk/Corp/Enron@ENRON, Chris Abel/HOU/ECT@ECT Subject: 12/5 Limit Violations and Notifications
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