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


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

Subject: Re:  

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

Thanks



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

Subject: 

John

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

Mike

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

These standards are a key part of the core discipline for all trading staff - 
both Commercial and Commercial Support - and you should review them 
carefully.  If you would like to raise any specific questions, please follow 
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 
implemented operational control standards. These standards, which are common 
for all businesses, aim to prevent errors and inaccuracies and ensure the 
timely recording of trading transactions. 

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 general 
ledger
- Implementation of business and control infrastructure

What else is important when controls are implemented?

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

Why do we need to standardised controls?

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

How do we measure successful control?

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

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

Where can you find details of our fundamental standards?

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

 - Original one pager