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cleanFiles/bookmap_SAP_Commodity_Management_Solution_for_Oil__en-US_learning-sap-com_lsc-prod.zip (MMCP-DROPZONE) - 2025-03-17T13:06:31.000Z

Explaining Concepts of Risk Reporting and Reporting Framework in Risk Management

<div id="content"><div class="parentsection"><div class="section"><div class="kalturaVideoLessonWrapper"><div aria-label="" class="kalturaVideoLessonContainer" data-testid="video" id="1_fxm44hv6"></div></div></div></div><div class="parentsection"><div class="section"><div tabindex="0"><h3>Lesson Summary</h3></div><div class="formalblock"><p tabindex="0">In this video you've learned:</p></div><ul style="list-style-type:disc"><li tabindex="0"><strong>Commodity Management Tables:</strong> Capture detailed data for risk reporting, including logistics and financial aspects, with version management for audit trails.</li><li tabindex="0"><strong>Versioning System:</strong> Tracks changes in contracts and orders, ensuring accurate reporting and audit trails by maintaining historical versions.</li><li tabindex="0"><strong>Risk Reporting Attributes:</strong> Integrate complex pricing, market conditions, and exposure analysis for comprehensive risk management insights.</li><li tabindex="0"><strong>Snapshot Management:</strong> Fixates data sets with market-published prices for reliable risk reporting, allowing for comparison of historical snapshots.</li><li tabindex="0"><strong>Flexible Reporting Tools:</strong> Utilize CDS queries and external tools like Power BI and Excel for generating detailed risk management reports.</li></ul></div></div></div>

Adding free Characteristics to Dictionary Structures

SAP Commodity Management Solution for Oil & Gas and Metals & Mining

SAPIndustry_Day_4_Part_4_.mp4

What I would now go back to is our risk management slide. And I would like to talk, what I would like to cover is basically, you know, a few concepts of risk management and concept of some risk reporting attributes and how the whole commodity management tables are designed and so. on and so forth. So we already spoke about this, right? We saw how the whole commodity risk management solution looks like. So moving forward, I would like to talk about how the data analytics or what are the different commodity management tables and how the whole architecture is designed. So apart from your standard SDMM and SDMM tables. We also have commodity management tables. We already discussed this in a couple of weeks back when Seward was talking about the pricing engine and stuff. But there are specific tables now when it comes to risk management. So what do you see here, this side is the financial side and these are your logistics side. So specific tables, these are called this is a table on the logistic side basically which is VLOB or CMM underscore VLOP what it means is versions logistic pricing right so unlike your other normal SdMM tables these are now slightly different and there's so much data stored here you might be a little bit overwhelmed but then it gives you all the information required for your risk reporting, right? So all these, you know, end-to-end points of a life cycle of a physical trade are all transferred to this wheel of V table, which means every time you do a purchase contract and you do a subsequent purchase order, it updates this table. You create a goods receipt, it updates the table. Not only that, if you, if you, you change a particular purchase contract, it will create a new version. So I'll talk about that. So every time there is some change, so you know what was my previous version. So when you are trying to generate a report, for example, a day-over-day report or, you know, a month-to-date report, or you want to compare yesterday's position with today's position to see what changes have been done. So this versioning will give you that flexibility. Not only that, it is very crucial when it comes to audit trail, right? Because now that you have, you know, a risk management as a whole solution or a reporting structure available, you don't want anyone to mess up with the data or, you know, create some random data in the table or, you know, all those sorts of things. So when it comes to audit trail, it becomes very crucial when you have multiple versions. So you know at each step or of each version, who changed, what changed and, you know, what caused position report or exposure report to be different than yesterday. So that is that that that is the main advantages of having a version table. And that that works same for financial side as well. well so we have similar two tables we fin d and we fin r so which means a version financial documents and version financial results so one table captures the only trades uh the position information like you know a number of lots prize DCSID and all that parameters associated with the trade and the second when you perform the end-of -day results mtm evaluation so it gets stored into the results table again both of these or all these three tables are capable of version management so for example even on the financial side if you do if you do a trade and change it it will create that and then it once you do a evaluation it will always use the latest version to you know capture calculate the PNL so same goes for VLOP as well. The difference between financial and physical side is the MTM is calculated on the fly for financial and it's always done on the reporting level. But again, that is something standard does. You can create your own CDS queries as well on top of VLOCP, which is quite informational and extensive when it comes to accessing all the data with respect to the physical documents. Okay, and the free characteristics which you saw basically are integrated in all these tables. So not the results table, but in V-Lock P and V-FIN-D. So whenever you generate a report, those three characteristics should be able to give you the results based on a particular free characteristics as well, if that is what the intention is. So what this means, right? what are the other what other parameters or what are the steps that this risk management risk reporting provides you so we have already seen in you know during our pricing presentations that how pricing gets integrated how DCs IDs quotation rules and you know what's a pricing window basically you can have your five-day wraps, three-day wraps, or a month based on, for your pricing window, for your contract prices for a particular contract or order, right? And if you have any commodity curves or forward prices or any FX rates which are available, or to be specific also, if there are any conversion factors, right, if you have different unit of measures in the document, but the commodity is set up in some other unit of measures. So all those specifications which you can do through CPE and also, again, different calendars because different regions have different calendars, different vendors refer to a different calendar. For example, Plath, Sargis, they have their own calendars. So all these parameters, you know, it defines a particular exposure, right? So if I have a purchase order with a delivery scheduled in September, somewhere in sometime in September, and my pricing is basically, let's say, the final price is based on a month of September, right? So in the risk reporting, how do I know, you know, because although all your MMSC tables capture this information somewhat, but the more detail. the more deeper or more complex pricing gets, it's very difficult to decode that kind of information from just the MMSC table. So that is why we have these commodity management tables or risk management tables where all these information is very easily accessible, which is very crucial for your risk reporting, or for that matter, any reporting, right? So all these complexities and at, attributes are integrated and available for risk reporting. So this is a slight example, right? So this screen here, left side shows a purchase order or could be a sales order also, it doesn't matter, or a contract. So this is a very simple pricing, right? So you have one contract price, condition and a market price, and a market price. and this is, oh, sorry, this is your V-Lock P, basically. So you see here, the pricing key is nothing but your, you know, technical or document number as well. No, no, sorry, the pricing key is basically the way the CP integrates. So every time whatever pricing attributes you have assigned to a particular document, it gets an internally generated number. And you, of course, you have the document number here. And the condition types, the items. So if there are more items, everything will be captured in the CMMV log P table. So valid from, valid two, time also is captured. And basically a document type is reference with a bus type, right? So, for example, a purchase order or a contract or a sales order. So they all have their individual document types when it comes to be lock, B. And this is standard delivered. So every time you do a particular kind of a trade, you can, from a reporting, you would know what kind of trade it is or, you know, if it is a purchase or a sales, contract or an order. So that is the idea behind this. And then if you see, you have for the same pricing key or for the same document, you have different line items or versions. So version one signifies that this was the first version or every time a new version gets created, it is blank. The version number is blank. That means the latest version of any document is always reference with a blank value and subsequently the previous version is one and if there was any subsequent change on top of this then there would be another more two line items with version two so that's how the versioning works so it's it's not like the highest number is the latest version it's not like that is the smallest number or the blank value is always the latest version for a particular physical deal. Same logic applies in the financial side as well. Now when it comes to reporting, the same information is then captured also transferred to your reporting as well. So this is a small sample report. We will, since we have a separate item or agenda item for risk reporting as well, we will spend more time during that presentation. So if you see the risk reporting gives you the contract value based on condition types and all these now information is basically captures is captured based on the latest version so the prize if there was any effects rate since this is I think native currency there's only one I mean there's no effects related changes here it also gives you the value based on the condition price and the quantity and market value, the same concept here. And, you know, based on the timestamp and the versioning, you would know absolutely what kind of information you are accessing through your risk reporting. So this is just a few more details, right? But the way risk reporting is provided, I mean, you obviously have conditions, various condition types can be created. But the most what we have seen is there will be, if we have talked in simple terms, there is a contract condition type, which it basically follows your contractual terms. for example, if you have a vendor with which this purchase was done. So basically, whatever is the negotiated price or negotiated payment terms would go into contract. The same value will go into your invoicing as well. So this is what you would see when you finally invoice it. And now market condition is a statistical condition type, which does not flow, it does not have any impact on your financials, but this is for risk management, basically. So let's say you did a crude commodity or a gasoline, right, like an RBO gasoline or a grade 84 gasoline commodity, and that is something which you do with provided by your vendor. But then since the market for your mark to market calculation or for your risk management, You don't know, since this is a spot price, you don't know during the price of, during the whole tenor of the purchase cycle till the delivery is met, what price fluctuation might occur. And for your exposure analysis or MTM analysis, it becomes very critical that you have, you know, a forward-looking curve, which will give you that kind of information on your. condition of the purchase order. So that's what we usually do is create a market price. So for this, basically, let's say, and it helps also in hedging, right? So this market condition could be based on a standard future, like a gasoline future, R-Bob future. And since all the futures have a forward-looking structure price, so that gives you an ability to see how this particular product, it moves to a closing. standardized product in the market and based on this then you do your hedging activity you do a sales commodity future for our Bob and that's how you hedge basically I mean this is a very simple scenario but it could get more complex based on different contractual terms and all no matter what condition types you have all these condition types that I was talking about earlier are captured into risk reporting so another also just let me go back yeah so another attribute of the versioning also is let's say you had a purchase contract but your let's say you created a purchase contract for 100,000 barrels but then the final delivery or you know purchase auto was created only for let's say 5,000 barrels so so What happens is in the V-Lock P for that contractual line item here, you would see a balance quantity always. So your risk reporting knows, okay, the contract has some value available in it. And until that value is diminished, that line item will have always the active timestamp. So as soon as, let's say, the purchase order was delivered, then that particular line item will have the validity would be equal to what the quantity was delivered or invoiced for that matter so that you know every time there is some specific purchase order created or a delivery is created so that quantity gets on decreasing or even if you add a new purchase order or you know create new contracts so all those cycles are captured and that information is then available into your risk reporting. So again, going into the risk report table V-Lock-B. So as I was saying, every time you do any kind of change or do any update to a trade, no matter what change it is, a new version is always created into V-Lock-B. And if you see that the change will be the valid timestamp. If you see now, the most active version has a valid two till 9999. And the recent update or the first version of it had now become the valid to. Oops. Valid two date. So the date of the change which you perform on a particular trade, that becomes the valid to date of the old record. and the most active version would always have valid 2 as 9999. So the system knows what's the most active version. So this is another way of identifying, which is your most active version. So this is just an overview of a simple, based on what we discussed, a simple risk report. As I said, we have dedicated presentations for risk reporting. So I would not go into detail today, but just to give you an idea on how our queries look like. So this is on a physical side again. So on a physical side, as soon as you, there are different kinds of reports, right, or queries for that matter, CDS-based queries. So these are quite flexible. they can be used with an external tool like B.I, like, you know, PowerBi or even analysis for office from Excel or analytics for cloud. So all these external tools can be integrated with the CDS queries or HANA queries and, you know, reports can be generated. So the screenshot is from an analysis from office, which is the most simple to use, since everyone is aware of how Excel works. So we have different queries also, like end-of-day queries, ad hoc queries. So the difference is end-of-day queries require a snapshot to be executed. So another attribute of risk reporting is in every organization, based whenever the market prices on the end of the day are published by the market and they're available in the system, a snapshot is executed. So what snapshot means it fixes all the contracts and values based on the prices available. So that means that snapshot cannot be changed anymore, meaning that particular data set is what goes into reporting. So that is required from a risk. management point of view because you don't want people just, you know, changing the price and, you know, generating n number of reports without any facts or, you know, without any audit trail behind it. So snapshot management makes sure that, you know, a particular data set is fixated with a particular price published by the market and all the values along with it. But of course, you know, you can, if sometimes or majority of the times what happens is market republishes a price. Like, you know, today it was 2.449 for today's end of day, but tomorrow morning the market publishes a new price for yesterday again. So you then have the ability to run the snapshot again for yesterday and then it will create since everything in commodity management is version managed. So it will create a new snapshot for a new timestamp. So then you would know, okay, you know, you can still go ahead and compare what was my earlier snapshots values and what is my new snapshot values. And apart from that, you also have, you know, ad hoc reporting. So what it means is you don't need to run snapshots. So during the day also, you know, as soon as a trade is completed or, you know, anything based on even old prices or the exchange provide or you know most of these vendors and exchanges they also provide midday prices so you can even generate or create your evaluations based on these midday prices or unconfirmed unsettled prices right so that is basically difference between ad hoc and end of day for end of day you basically need to run a snapshot for add-off you need not run any snapshots.