Energy Credit Best Practices – Chapter: Information Technology http://ccro.org © Copyright 2022, CCRO. All rights reserved. 37 price, quantity excreta. All transactions are governed under one master contract. Examples of common commodity Master Agreements are EEI, ISDA and NAESB. Maximum Exposure – Is the highest potential credit loss from the default of a counterparty or customer. Equates to a very high Confidence Interval such as 99%. National Institute of Standards and Technology (NIST) - A unit of the U.S. Commerce Department. Formerly known as the National Bureau of Standards, NIST promotes and maintains measurement standards. It also has active programs for encouraging and assisting industry and science to develop and use these standards. Natural Language Processing (NLP) - An artificial intelligence-based approach for helping computer System s understand interaction mechanics with humans. This typically involves language and pattern recognition, and is typically implied through the means of “chat bots,” though there are numerous other applications for NLP. Parametric - The Parametric method, also known as the variance-covariance method, is a Risk Management technique for calculating the VaR of a portfolio of assets that first identifies the mean, or expected value, and standard deviation of an investment portfolio. The Parametric method looks at the price movements of investments over a look-back period and uses probability theory to compute a portfolio's maximum loss. The variance-covariance method for the value at risk calculates the standard deviation of price movements of an investment or security. Assuming commodity prices and volatility follow a normal distribution, the maximum loss within the specified confidence level is calculated. Physical Security - Physical security describes measures designed to ensure the physical protection of IT assets like facilities, equipment, personnel, resources and other properties from damage and unauthorized physical access. Physical security measures are taken to protect these assets from physical threats including theft, vandalism, fire and natural disasters. Potential Future Exposure (PFE) - PFE is the stochastic model method estimating potential credit loss on a future date with a specified confidence interval. Predictive Analytics - Intelligence and analytics that attempt to predict specific outcomes based on historical data. Profit and Loss (PnL) - Is the day-over-day change in the value of a portfolio of trades typically calculated using the following formula: PnL = Value today - Value from Prior Day Regulated/Public Utility - A regulated or public utility company (usually just utility) is an organization that maintains the infrastructure for a public service (often also providing a service using that infrastructure). Public utilities are subject to forms of public control and a regulation ranging from local community-based groups to statewide government monopolies. Risk - A measure of the extent to which an entity is threatened by a potential circumstance or event, and typically is a function of: (i) the adverse impact, or magnitude of harm, that would arise if the circumstance or event occurs and (ii) the likelihood of Occurrence. Risk Assessment - The process of identifying risks to organizational operations (including mission, functions, image, reputation), organizational assets, individuals, other organizations, and the Nation, resulting from the operation of a System.