Aligning FRM initiative with FX Management meeting

This morning FRM presented the RMC package on approaching Finance Risk from a group wide perspective to the FX Management team.

The central theme to this meeting was to discuss ways and means to achieve similar objectives. The key take away from this meeting, to my mind, is how FRM and FX Management can work together, share information and achieve the deliverable of identifying, assessing Finance Risk framework imlementation and FX risk profile for the Group to facilitate the management, reporting and mitigation of FX risk and the Finance Risk roll-out going forward.

As a start, we need to :

• compile a database of existing information and fact-finding to date, gathering resources from FX Management, Group Strategic Planning and perhaps Business Planner of each business line within PETRONAS Group.
• identify additional information that is required
• define how this database is to be developed and maintained
• who will be responsible to maintain this database
• standard templates required
• key deliverables for this is the information database and templates required before approaching OPUs

Developing the strategy in approaching OPUs need to take into consideration of :

• To what extent Corporate Risk has profiled risk for the OPU. This is to ensure that when Finance Risk approach OPU, we know the context of our approach vis-a-vis OPU overall risk management strategy
• To what extent is the Risk Management Framework addressed at each OPU
• What information resides at the Business level (Strategic Planning) before going into OPU details
• We need to have meetings with relevant parties ie OPUs, CRMU at this stage.
• Incorporate all this in the information database
• Key deliverable at this stage will be a current assessment report.

Once we have all this then we will need to define scope of finance risk coverage by :

• Define area of coverage ie physical commodity flow within PETRONAS Group
• Define coverage scope ie which physical commodity flow should we focus on Petchem? Oil? LNG? Domestic? International? We have to brainstorm on what makes sense.
• The information database to a certain extent may dictate the scope ie focus on where we have the most information
• Documenting the physical commodity flows
• Get the ball rolling then....roll-out, roll-out and roll-out!