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Risk Management

OTI has a robust risk management framework and control environment in place to mitigate the inherent risks of trading to a tolerable level for the organisation and the appetite of OTI’s shareholders.  The shareholders and Board of Directors set risk appetite through:

  • A group economic capital limit.
  • Portfolio risk limits for different risk classes.
  • An approved risk limit registry comprehensively documenting active trading mandates.

The risk management framework at OTI contains a suite of risk management policies, procedures and delegations. We rigorously apply the following key principles:

  • Compliance with all relevant risk policies and limits are monitored daily by the risk management function.
  • We act on breaches of policy and employ strict escalation procedures to ensure that both OTI and the businesses it operates in are adequately protected.
  • We appraise risk in our transactions and wider business activities on an on-going basis to ensure that actions are taken to address any changes in the risk profile of the group.
  • We ensure management have sufficient timely quantitative and qualitative information regarding the risks within the businesses through daily, weekly and monthly risk reporting.

Through day-to-day trading activities, OTI assumes commodity price risks. Outright price risks inherent in our contracts to purchase or sell physical commodities are systematically hedged either through an offsetting physical position or through the use of financial instruments. Residual basis risk assumed is managed within approved limits. OTI takes a very prudent approach to counterparty credit risk. Limits are assigned by the credit function for all trading counterparties, supported by additional concentration limits across the portfolio. First class security or adequate risk cover is our priority, ensuring the risk of significant financial loss is negligible.

At OTI we have a structured and risk aware approach to conducting business, acknowledging the inherent challenges present in the industry in which we operate. Combined with the depth of expertise and experience within the company, this allows for effective management of exposures, resulting in a reliable and trustworthy trading partner for our counterparties.

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