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Received.
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Vince
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Tom, FYI.
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I hope to meet Nick Bambos this weekend.
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Vince
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Jennifer, Thanks.
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No, Fordham University in my case.
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Vince
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Received.
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Thanks
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Reddy, Please, keep trying.
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It's a trading operation and it's difficult for me to commit to a block of time in advance.
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Vince
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Iris, Vince
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Anne, For the time being it's fine.
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She will soon become an associate.
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Vince
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Cassandra, This is an outline of the scope of the project on Enterprise Wide Risk Management.
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Vince
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Anita No problem.
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I hope the results are OK.
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Vince
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Confirmed Thanks Vince Kaminski
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Jana, No problem.
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My apologies.
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My brain is aging fast.
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Vince
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Cathy, I can take 4 tickets.
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Thanks.
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Vince
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Kevin, I would like to see the expense reports to monitor the rate at which we approach our group budget limits.
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Thanks.
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Vince
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Cathy, Yes, I will take them.
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Vince
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Steve, Thanks.
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I shall add to the length when DVN drops on the news of lower nat gas prices.
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Let's go out and eat (moderately) in a few weeks.
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Vince
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Shirley Please send this info Michelle Vince
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Andy, FYI Vince
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Paula, No, I drove.
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Vince
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John, Sounds interesting.
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I shall put July 27th on my calendar.
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Vince
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Vince Kaminski Enron Corp. 1400 Smith
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Jeff, Another indication of tensions in EC.
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Vince
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A few comments on the state of our VaR models.
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The issues always become more controversial during the periods when vols and positions increase and I would like to share with you a few observations.
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1.
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Critical importance of a good risk management system to Enron (and the P/E ratio).
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A number of recent analysts' reports characterized Enron as a hedge fund engaged in massive directional trading and representing huge risks to investors.
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One way to counter this crirticism is to emphasize the quality of Enron's risk amnageemnt system and our strong risk amangeemnt culture.
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Our claims regarding the strong risk management technology and culture should be, however, supported by reality.
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It is critical that we continue to improve our risk management systems and also can convince the external parties (stock analysts, creditors, credit rating agencies) about the quality of our financial technology.
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This can be done through targeted disclosure of the elements of our technology, as we have done frequently in the past.
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by reality.
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2.
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Inputs from the trading desks vs. historical calibration.
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The VaR system used in Enron is based on the assumption that as much input information as possible should come from the market (i.e. trading desks), or should be calibrated to the market observations (as opposed to historical data).
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One immediate improvement: we should review inputs that are not based on the trading desks information and move, if possible, to replace them with market based, forward looking data.
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One should not assume, of course, that the information coming from the trading desks is perfect.
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One problem that is persistent in some portfolios is the disconnect between the posted forward vols curves and subsequent fluctuations in the forward prices curves.
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The forward vols curves should be relatively unbiased expectations of future realized forward price volati;oty.
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If this is not the case, back testing for some portfolios will systematically fail.
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One way to address the problem is to implement a module that compares systematically fwd vols posted by the trading desks with subsequent price movements.
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It will allow us to identify the source of problems we see in some books.
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3.
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VaR process management.
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Given the size of our trading operation, we are running a VaR factory, a system designed to produce timely risk assessment for all the portfolios.
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What is missing is the industrial type process that guarantees the quality of the results.
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Specifically, I am concerned about absence of one person vested with the responsibility for the model calibration.
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Right now this responsibility is dispersed in the organization and resides somewhere between the IT, RAC and Research.
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As a result we have inputs updated inconsistently and without proper quality controls.
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Some inputs used currently in the system are 2 years old.
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Another aspect of this problem is prioritization of different projects.
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In my view some recent modification to the system tied up IT resources and were of marginal usefulness (and in some case on questionable understanding of mathematics).
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Of course, I can be wrong but there is was no systematic process to bring these issues to the table, in a meeting involving all the concerned parties and
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Dear Mr. Fink, I am sorry to decline the invitation due to prior commitments.
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Vince Kaminski
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Shirley, Expense checks: Vince
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Deniese Palmer Huggins 1000 Louisiana Street Suite 1095
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Vin, Plz, see if you can access this page: This allows to slect choices for PC and DS.
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Dad
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Pavel, Let's meet for drinks before you head for the Big Apple.
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Vince
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Liz, I can take one set, either today or tomorrow.
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Thanks.
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Vince
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Pavel, Vince
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FYI Vince
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Liz, Thanks.
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Vince
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Shirley.
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OK Vince
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Call Grant about Tony
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Eric, No problem.
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Vince
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