Specifically written to save time and aid decision-making among busy senior executives and managers - and indeed any reader - who does not wish to be hampered by unnecessary technical detail while gaining a clear understanding of energy risk management issues.
Illustrates the purpose of energy derivatives, and evaluates their benefits and weaknesses.

More complex, quantitative material is present, but as an optional extra to your understanding - appearing only in technical appendices should you wish to deepen your appreciation of the subject and apply it to your own business.

Succinctly explains how energy derivative instruments are constructed and priced, as well how their risk can be understood and managed.

The report equips you with:

• The ability to identify risks and their interactions.

• Techniques to express these risks clearly.

• An appreciation of trading activity and its role in risk management.

• A thorough understanding of energy risk management (derivative) instruments and their relationship with physical supply and off take agreements.

• Insight into how risk management solutions can be constructed to offer protection against market price movements.

• The ability to identify flexibilities in physical operations and recognise their value.

Key to Risk Books' series of executive reports - this title is concise, highly accessible and practical - offering easily digested chunks of information. And to further aid your understanding it makes extensive use of bullet lists, diagrams, chapter summaries, learning aids and many market relevant case studies that marry the concepts of energy derivatives with recognisable events.

INTRODUCTION
Energy risk management
The risk management process
Style of presentation in the book
Chapter review and look ahead

RISK IN ENERGY MARKETS
Financial and commodity markets
Understanding risk
Designing a risk management programme
Chapter review and look ahead

MARKET VALUE OF PHYSICAL AND FINANCIAL COMMITMENTS
Preamble
Commitments, positions and market prices
Position
Market prices
Contracts and mark-to-market quantities
Mark-to-market is valid only for an instant
Chapter review and look ahead
Technical appendix: Interest rates and compounding conventions

PHYSICAL TRANSACTIONS AND BASIC HEDGING INSTRUMENTS
Physical transactions:
Preamble
Physical producer
Physical consumer
Physical transformer
Risk analysis
Physical futures and forwards
Futures contracts
Forwards contracts
Fixed-for-floating swaps
Other types of swap
Floating-for-floating swap
Quanto swaps
Indexation swaps
Other swap types
Chapter review and look ahead
Technical appendix: Futures margining
Technical appendix: Pricing of OTC linear instruments

FUNDAMENTAL OPTION CONCEPTS
The language and nature of options
Why and how are options used by hedgers?
Moneyness and option values
Factors impacting option value
More on volatility
Moving Beyond European options
Asian options
Integrated physical and risk management contracts
American options
Swaptions
The cost of hedging with options
Chapter review and look ahead
Technical appendix: Black-Scholes option valuation

DERIVATIVES PACKAGES
Combining options into a package
Relationship between put and call option values
Collars
Three-way options
Buy-downs and participations
Structures with volume and timing flexibility
Integrated physical and financial structures
Chapter review and look ahead

FURTHER TOPICS IN DERIVATIVES STRUCTURING
Spread and basket options
Digital options
Quanto options
Other structure types
Real Options
Hedgeable and non-hedgeable risk
Hedge-based financing
Chapter review and look ahead
Technical appendix: Getting the most out of your quants
Technical appendix: Diagrammatic notation

WIDER RISK MANAGEMENT QUESTIONS
Market risk
Market Value at Risk concepts
Market VaR techniques
VaR as a means of market risk control
Market stress testing
Physical risk
Uncertainties for which there are no traded markets
The Risk Matrix approach to transaction analysis

REFERENCES
General and finance

Steve Leppard is a Director in Merrill Lynch's commodity structuring group in London, a post he took up in October 2006. Prior to this Steve has held posts as head of BP's global oil structured derivatives group in London, SG's senior strategist for their Gaselys JV with Gaz de France in Paris and head of Enron Europe's quantitative research group in London. Dr Leppard holds a PhD in Mathematics from King's College London and a first class honours degree in Mathematics from Imperial College London