Flexible solutions adapt to rapidly expanding needs

SAS^® risk management solution ends “sleepless nights” for Czech energy giant

When you’re responsible for the trading group at a major energy supplier, time is money. Ludvik Baleka, chief of the Gas Trade Division at Czech energy firm MND, puts it this way: “Whenever opportunity presents itself, we immediately try to make use of it. Any significant delay could potentially cost millions of dollars.”

Baleka reports to a board of directors, which allows him to get quick approval for trades. But his team must be able to react quickly. “We needed software that could make this possible,” he says.

The MND Group operates in 10 countries across Europe and Russia as a producer, supplier and trader of oil, natural gas and electricity. The company also operates 700 million cubic meters of natural gas storage and trades in natural gas markets to optimize the value of those assets.

The company’s fast growth has created new challenges for its commodity trading group. “When we started six years ago, we had roughly one transaction per month. Now we have 60-100 per day,” says Baleka. “To manage our portfolio, we started by using Excel, then created our own application. But processing the important transactions without making a mistake was extremely demanding, so it gave me sleepless nights. It was obvious we could not do without a good energy trading and risk management system.”

MND adopted SAS^® BookRunner^® over competing solutions because it is tailored to energy traders’ specific needs. “Not many firms own and operate natural gas storage facilities,” he says. “If they do, they don’t actively trade in this segment. We do, which is why we need truly advanced analytics.” 

Big data, no problem

Flexibility, reliability and the ability to integrate data from multiple sources were the key drivers for MND’s selection of SAS BookRunner. The company uses the solution to track transactions and market prices, as well as generate reports for risk assessment. A flexible data model allows administrators to add transactions or commodities while automatically storing an audit log of all trading data.

MND also uses SAS^® Enterprise Guide^® to expand analytics on the fly by accessing SAS BookRunner data. For reporting, SAS Visual Analytics enables MND to share BookRunner output across the company.

“A great advantage is the number of tools integrated into a single solution,” Baleka says. “Our competitors have similar tools but from different suppliers, which can cause problems. The volume of data we generate is so huge that our previous solution could not cope with it. We even had to lop off historical data.

"Another drawback of the previous system was that it was not auditable. Whenever an error is made, you must know who is responsible for it. Now, we know exactly who is doing what. SAS handles big data without any problems.”

Flexible platform, flexible business

Flexibility in its software solution is critical to MND. The company itself grows by expanding into new regions and new commodity markets. It started in the natural gas market and expanded into electricity, then oil and currencies. It plans to enter other markets such as emissions trading. The flexibility of SAS BookRunner allows MND to easily add these commodities to its portfolio and monitor risk limits for corresponding exposures.

“Our broad portfolio requires a very flexible tool, and SAS BookRunner is prepared for that. Adding a new commodity with a simple click is unquestionably an advantage,” says David Vilkner, the risk manager who runs MND’s middle office. “At the same time, I appreciate that it’s not a black box. We are increasingly able to configure the SAS platform to precisely match our needs. This gives us the necessary flexibility.”

SAS BookRunner is used across MND’s functional teams, whether entering transactions and valuating products in the front office or optimizing processes and managing risks in the middle office. The back office also uses the solution to process transactions, perform audits and produce invoices. The entire trading operation benefits from multiple reporting formats used to produce both internal and regulatory reports – alleviating administrative workload.

“SAS has helped us not only increase the volume of transactions and revenues, but also enter new markets,” Baleka says. “Without it, we wouldn’t have dared to enter five electricity markets simultaneously. Our turnover has increased by 1,000%. We couldn’t have achieved that without SAS.”