---------------------- Forwarded by Vince J Kaminski/HOU/ECT on 12/22/2000 
05:42 PM ---------------------------


Vasant Shanbhogue
12/18/2000 03:14 PM
To: Vince J Kaminski/HOU/ECT@ECT
cc:  
Subject: Wharton collaborative research

Here is a short note on potential research with Wharton.  Please review and 
edit and then we can send some indication to the Wharton guys.    ----------

 The objective would be to define the amount of risk an enterprise can take, 
and the difference between this and the actual amount of risk the enterprise 
chooses to take based on the capital structure and reporting structure.  In 
particular, one can view Enron as a hierarchy of companies, and assuming we 
can separately quantify the risks of each unit, what framework would one use 
to analyze risk at Enron? 
  A related question is how one should represent risks in the different 
units?  Risks may be of different types --- short-term volatility risk, 
catastrophic risk, liquidity risk, etc --- what should one focus on for a 
first cut?
 Another related question is to decide on the optimal amount of insurance 
both at the unit level and the enterprise level, and relate the decision to 
get insurance to the cost/benefit of insurance.