The Importance of Energy Derivative Training

It is common for management at energy companies to recognize the necessity of directing significant resources to develop systems that monitor and manage the complex risks experienced in today’s energy markets. Yet when it comes to developing its human capital, arguably the more crucial component dealing with these same complex risks, the commitment is all too often diffuse or misdirected.

This situation follows on from some misperceptions about who benefits from training and what type and level of materials match the needs of various candidates. One misguided view is: “hire expert dealers and everyone else will learn from them”. Undoubtedly a great deal of useful knowledge can be acquired by working around veteran traders and other experienced professionals. The trouble with this learning approach is in the major gaps it leaves in the employee’s knowledge base. The real concern is that, more often than not, the employees and even their supervisors can remain unaware of these deficiencies.

A substantial risk to an enterprise follows from this: People don’t know what they don’t know! It is also the biggest challenge in identifying an organization’s specific needs for energy risk training. It applies to both individuals and collective groups; to both new hires and seasoned veterans. It is what they don’t know that can really hurt an enterprise.

A Lot to Learn

Repeatedly over the last decade Paradigm instructors have seen professionals, self-described at the beginning of class as “reasonably knowledgeable” in risk and derivative concepts, admitting by class-end to having recognized material knowledge gaps. These included senior risk managers, veteran traders, even Chief Corporate Risk Officers who reported that they had “learned a lot” and now realize that “there is much more to