Risk Evaluation

Risk, by definition, is neither bad nor good...it is simply a deviation from expected outcomes. At DaCott, we evaluate the risks faced by our clients and quantify and explain those risks to ensure that decisions are made with a complete understanding of the potential outcomes. Understanding the risks related to a client's position allows the client to better plan for unexpected outcomes. Effective risk management enables our clients to avoid extreme situations that negatively impact the bottom line:

Consumption Risks

• What factors drive potential changes in consumption and how should supply contracts be structured to minimize the economic impact of those changes

Market Risks

• Markets are volatile and too much exposure to these volatile markets can result in drastic swings in energy costs
• Minimizing this exposure allows our clients to more confidently plan for future energy costs

Regulatory Risks

• Changing regulatory regimes can directly impact the cost of energy
• Many of these risks can be mitigated through proper contract terms

Credit Risks

• Credit risks manifest themselves in many ways
  • Supplier Credit - ensuring that a client is contracting with credit worthy suppliers to avoid potential supplier defaults leading to unintended exposure to market prices
  • Ensuring that contracts are structured to avoid onerous credit provisions on the client that could result in significant outlays of cash or credit support

Every client has a different risk tolerance. At DaCott, we evaluate both the risk exposures and the client's tolerance for risk to structure a supply strategy that is both clear and consistent with the client's objectives.