In the past, the use of ‘sophisticated’ risk tools and metrics was considered the bailiwick of the very largest entities that could afford to develop and run with such an approach. Often they saw advanced risk analytics as offering them a strategic and/or competitive advantage in the market. Others in the commodities space simply could not afford to perform sophisticated risk analytics and anyway, they often didn’t have the skills onboard to perform, or even understand, them appropriately. Some firms resorted to using more simplistic reporting of positions, or other metrics, to monitor ‘risk’ and/or used somewhat simplistic limits for various forms of market and/or credit risk. Often, the calculation of exposures, or at-risk capital, value or earnings, or PFE, took a great deal of time to compute and if something went wrong, like a missing price for example, the calculation might simply crash before completion. This meant that often, risk exposures were only accurate well after the fact and were never available to inform the business when needed.

1. RISK AS A SERVICE
THE NEXT THING IN AFFORDABLE
CORPORATE RISK MANAGEMENT?
WHITE PAPER

2. Risk as a Service – The Next Thing in affordable Corporate Risk Management? A ComTechAdvisory Whitepaper
INTRODUCTION
In the past, the use of ‘sophisticated’ risk tools and metrics was considered the bailiwick of
the very largest entities that could afford to develop and run with such an approach. Often they
saw advanced risk analytics as offering them a strategic and/or competitive advantage in the
market. Others in the commodities space simply could not afford to perform sophisticated risk
analytics and anyway, they often didn’t have the skills onboard to perform, or even understand,
them appropriately. Some firms resorted to using more simplistic reporting of positions, or other
metrics, to monitor ‘risk’ and/or used somewhat simplistic limits for various forms of market
and/or credit risk. Often, the calculation of exposures, or at-risk capital, value or earnings, or
PFE, took a great deal of time to compute and if something went wrong, like a missing price
for example, the calculation might simply crash before completion. This meant that often, risk
exposures were only accurate well after the fact and were never available to inform the business
when needed.
With the speed of change in our industry; the renewed
and deeper scrutiny, regulation and geopolitical
environment, the need to perform faster, more rigorous
risk has broadened and now all entities in commodities
needtodemonstrateproperriskmanagement.However,
setting up a deep risk management infrastructure of
the necessary systems, processes and skills can be
very expensive and add an additional cost burden to
eat away at those reduced trading margins. While this
may look like short-term thinking versus the impact
of a cataclysmic market or counterparty event, it is
certainly an operational and budgeting issue that has to
be addressed and it often slows the progress of moving
towards a more risk management-focused corporate
environment.
Even when the tools and methodologies are in place,
it requires the skills, knowledge and expertise to
understand what they mean, and this too can be
both expensive and difficult to find. For example, if a
company choses to measure earnings at risk (EaR)
on a constant portfolio of trades, contracts and assets,
how can changes in EaR be explained in a meaningful
way allowing the business to use the tools effectively?
This is a complex calculation and drilling into and
understanding all of the different components of risk
takes both significant expertise and the right tools.
Historically, the emphasis has been on market, price and
credit risk, often using simple reports as outlined below.
However, unexpected geopolitical or other events are
now occurring more frequently and often with dramatic
effect. Use of portfolio stress testing and simulations are
one way to try to plan for these events. More rigorous
credit risk is also needed to help identify and limit
exposure to weaker counterparties and partners. Trying
to find ways to identify and mitigate other forms of risk
from operational risks to legal risks is also now a focus.

3. Risk as a Service - The Next Thing in affordable Corporate Risk Management? A ComTechAdvisory Whitepaper
© Commodity Technology Advisory LLC, 2020, All Rights Reserved.
RISK SOFTWARE SOLUTIONS IN ENERGY
AND COMMODITIES
To get around the risk management weakness inherent
in most E/CTRM software solutions, many firms have
hired experienced risk management staff who have
built up an array of internally developed risk tools, or
they have procured specialist risk analytic or credit risk
solutions from the limited number of small consultancy-
come-vendors that offer specialized risk software in
the space. These then have to be integrated with the
E/CTRM(s) being used by the firm adding cost and
complexity.
ComTech estimates that around half of the market for
advanced risk analytics is served by in house solutions
of one form or another. It is an area lacking a dominant
supplier or indeed solution, and this adds to the ongoing
expense of risk management. Furthermore, there is a
need for quantitative professional risk staff who are also
in demand and can therefore be expensive, ensuring
that providing solid risk management can be a pricey
proposition. On the credit side, there are a very small
number of comprehensive commodity-focused credit
solutions on the market and some of these are now
aging being 15-years or more, old. Essentially, the E/
CTRM is often insufficient as a risk tool and it needs to
be supplemented with a true advanced risk analytics/
credit solution.
For any risk professionals in energy and commodities, most E/CTRM solutions do not really offer
sufficient risk capabilities. In many E/CTRM solutions, risk management functions are limited
to basic ‘risk’ reports like position and PnL, basic credit and position limits, and perhaps some
fairly simplistic valuation tools that probably have limited applicability to physical instruments
or assets. Often, what risk tools are provided need overnight batch jobs to run to completion
to produce the reports, and any form of omission (prices, for example) can result in the job not
completing at all. This can mean that up to date position and PnL reports are unavailable at
critical moments in the trading day.
3

4. Risk as a Service - The Next Thing in affordable Corporate Risk Management? A ComTechAdvisory Whitepaper
© Commodity Technology Advisory LLC, 2020, All Rights Reserved.
Risk as a Service makes sense as an option for
commodity firms because of three key reasons,
1. Risk sophistication is no longer just for the larger,
more sophisticated players but, as pointed out
above, a necessity for all operating in these risky
markets with increasing regulatory and stakeholder
oversight,
2. Reducingcostsandoptimizingbusinessprocessesis
a major objective of almost all firms who increasingly
look to digitalization, cloud and outsourcing as
means to reduce costs and to increase agility and
effectiveness,
3. The service model has become much more broadly
accepted as a reliable and cost-effective model
across all businesses. A variety of deployment
modes and service level agreements can range
from classical on premises installation via cloud and
managed service with individual arrangements.
Larger commodity firms with multiple E/CTRMs
deployed for different commodities or geographies,
face an even greater issue in terms of being able to
see risk exposures at the enterprise level. Indeed, the
problem is even larger for entities that trade multiple
asset classes including commodities such as FX and
debt, for example. For many commodity firms, but
particularly larger firms with more complex operations,
risk software that is capable of quickly aggregating
positions and providing KPI’s on a timely basis is
extremely important.
4
In the broader market for software, skills and processes, the software as a service model
has begun to catch on as it provides a business a way to gain all three but on the basis of a
service level agreement and for a periodic fee as opposed to an upfront sunk cost and ongoing
operational expenses. With the advent of the cloud, the ability to offer cost effective software
as a service has become a reality. Indeed, in the energy side of commodities, it is now quite
common to outsource certain areas of the business, like scheduling and dispatch to outside
vendors who provide the service under an SLA. In other industries, the model has already gained
a wide degree of acceptance and the trend looks set to continue. So why not risk as a service?
FROM SPECIALIZED RISK MANAGEMENT
SOFTWARE TO RISK AS A SERVICE

5. Risk as a Service - The Next Thing in affordable Corporate Risk Management? A ComTechAdvisory Whitepaper
© Commodity Technology Advisory LLC, 2020, All Rights Reserved.
FIS’ CORPORATE RISK CAPABILITY
One vendor that has extensive experience providing managed services into the banking and
other sectors, including commodities, is FIS.
A proven and trusted provider of managed services
already has the infrastructure, security, internal
processes and service level agreements in place in
a tried and tested format and already provides such
services at high levels of trust and security. It will also
have the skills in house not just to manage IT services
like back-up and recovery or testing services but to
provide specific application and functional expertise
as well. To properly provide managed services
requires either a large vendor who has developed the
infrastructure and services already or a partnership by
the vendor with a provider of managed services.
MANAGED SERVICES FOR CORPORATE
RISK
A key aspect of risk as a service is the managed services provision that is more than simple
hosting and requires a provider with an infrastructure and experience in providing such managed
services. Proven managed services vendors provide for the management of everything from the
data center to the business process providing clients with benefits such as a lower and more
predictable total cost of ownership, the ability to focus on the core business and increased
agility, for example.
5
It is able to provide all aspects of a managed service at
multiple levels according to service level agreements
with a guarantee of financial sector security levels.
It also has commodities sector and other asset class
expertise and a high-end risk application in the form
of Adaptiv. This allows FIS to leverage its managed
services experience to save costs for clients while
delivering complex risk calculations via a service-based
architecture (Figure 1).
FIS provides cloud-based solutions on public and so-
called hybrid cloud, where FIS sets it own monitoring
and security tools on the top of public cloud. These
tools allow more efficient and automated monitoring
of all the processes and provide top security level to
protect from cyber-attacks.
Adaptiv supports physical energy deals, energy
options, transportation contracts, forward curves and
complex price formulae out of the box as well as a host
of valuation methods. Where the client uses complex
deal valuation approaches for things like gas storage,

6. © Commodity Technology Advisory LLC, 2020, All Rights Reserved.
Risk as a Service - The Next Thing in affordable Corporate Risk Management? A ComTechAdvisory Whitepaper
RISK AS A SERVICE
Risk as a Service is more standardized industry
offering and could indeed be the ideal solution for a
large number of companies. By delivering it both as
an individual cloud installation with managed services
or as a standardized Risk as a Service, FIS helps
reduce infrastructure and IT costs while providing a
high-end solution. The FIS Risk as a Service approach
includes data management, cleansing and QA. It also
provides exception management, quantitative analysis
support for issues like result validation, drill-down and
investigation,aswellasmodelcalibration.Intermsofthe
range of risk functions that it can cover what if analysis,
risk attribution, risk analytics VaR, PFE, exposures,
Greeks, Sensitivities etc.) and risk monitoring.
6
swing deals and/or virtual power plants, Adaptiv
offers the ability to pull in in-house model results, have
the user decompose the complex deals into simpler
structures, or through the use’ deals which represent
the deals as a set of sensitivities. Each approach has
its pros and cons and it is totally up to the customer
which way to go. However, the customer can benefit
by serving multiple locations and E/CTRMs with one
robust and scalable risk engine for all deal types, high-
performance and scalability.
Adaptive also has in depth credit risk functionality and
credit analytics meaning that it can be the single engine
for market/price and credit risk while also offering
valuation, simulation and stress testing capabilities
in a single, centralized enterprise-wide service or
application.
Figure 1 Risk as a Service

7. © Commodity Technology Advisory LLC, 2020, All Rights Reserved.
Risk as a Service - The Next Thing in affordable Corporate Risk Management? A ComTechAdvisory Whitepaper
7
SUMMARY
As the need to perform various forms of risk analytics
increases, many energy and commodity firms are
assessingtheirneedsandfindingthatanE/CTRMoften
does not provide the level of support or sophistication
needed. Those who have multiple E/CTRM solutions
and/or deal with other asset classes as well as
commodities, also need to be able to aggregate risk at
the enterprise level. However, adding the risk software,
skills and processes necessary to do this can be very
expensive both in terms of an up-front investment and
in terms of ongoing costs. Furthermore, there just
aren’t that many providers of risk or credit analytics in
the energy and commodity space and most of these
are small, niche consultancy-type firms so many firms
simply rely on in house developed solutions.
At a time when most commodity-related firms are trying
toreducecostsandincreaseefficiencies,havingtoinvest
in expensive staff and homegrown or niche solutions,
doesn’t help. However, the emergence of managed
services and software as a service has created another
way to reduce total cost of ownership and increase agility
in areas of the business like, for example, scheduling
and logistics. Risk as a Service then is an area where
forms can ensure the application of more sophisticated
risk analytics to their portfolio while keeping costs under
control. FIS’ Risk as a service is an example of this trend
where a major financial services focused company with
a proven managed services capability into an industry
with a need for a high-level of security, has come to
market with a high-end advanced risk analytics software
solution – Adaptiv – delivered as a service.

8. ABOUT FIS
FIS’ energy and commodities solutions help energy companies, corporate hedgers, hedge funds and
financial services firms to compete efficiently in global energy and commodities markets by stream-
lining and integrating the trading, risk management and operations of physical commodities and their
associated financial instruments. Through real-time data, connectivity, and analysis, FIS’ energy and
commodities solutions help customers achieve transparency and regulatory compliance, address end-
to-end transaction and operational lifecycles, and meet time to market needs with flexible deployment
options.
For more information, visit www.fisglobal.com or email us at getinfo@fisglobal.com
About FIS Solutions for Energy and Commodities
FIS is a global leader in financial services technology, with a focus on retail and institutional banking,
payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions.
Through the depth and breadth of our solutions portfolio, global capabilities and domain expertise, FIS
serves more than 20,000 clients in over 130 countries. Headquartered in Jacksonville, Fla., FIS em-
ploys approximately 53,000 people worldwide and holds leadership positions in payment processing,
financial software and banking solutions. Providing software, services and outsourcing of the technol-
ogy that empowers the financial world, FIS is a Fortune 500 company and is a member of Standard &
Poor’s 500®
Index.
For more information about FIS, visit www.fisglobal.com
About FIS

9. ABOUT
Commodity
Technology
Advisory
LLC
Commodity Technology Advisory is the leading analyst organization covering the ETRM and
CTRM markets. We provide the invaluable insights into the issues and trends affecting the
users and providers of the technologies that are crucial for success in the constantly evolving
global commodities markets.
Patrick Reames and Gary Vasey head our team, whose combined 60-plus years in the energy
and commodities markets, provides depth of understanding of the market and its issues that is
unmatched and unrivaled by any analyst group.
For more information, please visit:
www.comtechadvisory.com
ComTech Advisory also hosts the CTRMCenter, your online portal with news and views about
commodity markets and technology as well as a comprehensive online directory of software
and services providers.
Please visit the CTRMCenter at:
www.ctrmcenter.com
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ComTechAdvisory.com
Email: info@comtechadvisory.com