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