Triple Point Technology, the leading global provider of multi-market commodity and enterprise risk management software solutions, announced today that according to its survey of energy and commodity executives, 70% of companies are using spreadsheets or internally assembled systems to manage counterparty credit risk. In recent years companies have put off investing IT dollars in credit risk technology in favor of front-office systems. However, with the global credit crisis, commodity price volatility and an increased focus on liquidity management, companies are re-evaluating their credit risk systems and processes.
In fact, 60% of the companies surveyed felt the need to upgrade their credit risk systems to effectively manage counterparty risk in the current business environment. Companies using spreadsheets and disparate in-house systems find it difficult, if not impossible, to accurately measure portfolio exposure and manage credit limits across multiple business lines and commodities. Manual processes are labor-intensive and error-prone, leaving little time to focus on critical credit activities.
“In the midst of rapidly tightening credit conditions, never has it been clearer that companies using spreadsheets to manage credit risk are courting disaster,” said Dan Reid, vice president, credit risk solutions, Triple Point Technology. “That 60% of the companies surveyed acknowledge the need to invest in a robust enterprise system to manage counterparty risk is a great step in the right direction.”
Another key reason companies are looking to upgrade their current system is to improve their ability to manage master netting agreements and margining. There has been significant growth in the application and complexity of master netting agreements making it difficult to manage margin activity in a spreadsheet. Companies are looking to automate their ability to monitor inbound and outbound collateral obligations and utilize best-practice workflows to manage daily margin calls and disputes. Automated systems provide a competitive advantage and help companies quickly and accurately manage and report their liquidity with confidence.
In March 2009, Triple Point was voted #1 Credit Risk Software Vendor in Energy Risk’s annual software survey, polling users of energy risk management and trading software. Triple Point’s flagship counterparty credit risk software solution, Commodity XL for Credit Risk™, provides a real-time, integrated credit process for efficient and accurate credit analysis and decisions. Latency is removed from the work flow so conclusions are neither delayed nor based on incomplete data. Additionally, organizations can leverage the information to make risk-adjusted decisions, utilize best practice methods for reducing credit risk exposure and improve internal and external transparency.
