Squeezing more out of P&L explain

Commodity traders are increasingly aware of the need to squeeze greater profits from existing business activities. One oft overlooked tool for doing this is the P&L 'explain', write Akhil Sehgal and Anup Singh

The P&L Explain is a vital part of the risk management process, enabling the articulation of changes in the value of the portfolio over an economically relevant horizon. It provides an accurate picture of the portfolio's revenues and costs, together with their constituents, as well as quantifying the portfolio's exposure to relevant risk factors and allowing the prioritisation of actions necessary to manage those risks. While many commodity trading organisations believe the P&L Explain to be a