ETS exam 3 review.docx - /ETS Final Exam Review 1 Know the different types of Risks and their properties These 3 are the major Risks a Operational risks

ETS exam 3 review.docx - /ETS Final Exam Review 1 Know the...

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/ETS: Final Exam Review 1. Know the different types of Risks and their properties. These 3 are the major Risks. a. Operational risks : risk of mistakes and/or fraud resulting in inadequate or failed procedures, systems or policies. a. Field Operations (Accidents) i. Traders (Relationships Risk) ii. Transaction Confirmations iii. Online Trading (Black Book) b. Supply Chain Operations i. Traders (Relationships Risk) 1. Transaction Confirmations 2. Online Trading (Black Book) ii. Scheduling and Storage 1. Mistakes and Omission b. Financial Risk : risk of financial exposure due to market fluctuation. a. Protecting against rising or falling charges b. Locking in margins c. Mark to Market daily tracking c. Credit Risk : risk of non-performance of financial commitments. a. Credit Limits (Receivable) b. Liquidity Limits (Payable) c. Mark to Market (MtM Report) i. Accts Payable and Receivable • Hedge Trades ii. (Complete Picture) d. Other Risk a. Technical b. Security c. Data d. Environmental 2. Know what the purpose and approach of Mark-to-Market is. e. Measure the current value of the assets rather than just recording historical values 3. Know the properties of the Middle office and why the sector is vital. (2 parts) a. Part 1: Properties are CONTROLS and COMPLIANCE which includes roles such as
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i. Auditors’ Role ii. Management’s Role iii. Technology's Role iv. Government’s Role b. Part 2: In recent years the Middle Office of the Natural Gas (Energy) Industry has become one of the fastest growing sectors in our oil? industry. As our oil? Industry becomes more fast paced and risk averse, the role of the Middle Office becomes more and more vital. 4. Know what the roles of Auditors are. Auditors role: 1. Detective 2. Corrective 3. Preventive a. Auditor roles should involve: a. Controls designed to protect the company from harm are in place b. Control measures include i. Sarbanes – Oxley Act 1. Detective (Identifies Problems) 2. Corrective (Solutions to Problems) 3. Preventive (Deters Problems) ii. GAAP- Generally Accepted Accounting Principles c. When issues are identified, new safeguards are put in place d. Auditors need to involve Management on a timely basis
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