Efficient Frontier: A Brief Overview

The efficient frontier is a portfolio analysis concept designed to assess risk vs. return for an investment portfolio. 

The efficient frontier is a portfolio analysis concept designed to assess risk vs. return for an investment portfolio. While the financial projections of individual assets are key to the analysis, the end result is critical to successful structuring of the portfolio as a whole. Key to the efficient frontier is that it represents the highest level of a portfolio's return for any given level of risk. It can be applied to physical assets, as well as financial instruments—simultaneously. Figure 1 displays a typical efficient frontier chart.

Energy Technology Risk: Managing Hyper Gas Markets

Energy Trading & Risk Management: Gas price volatility has increased. Relying on antiquated scheduling systems is a recipe for disaster.

Given energy markets’ newfound volatility and the range of exposures that global energy firms must deal with, the reactive, reporting-oriented nature of transaction management practices is in need of serious revision. A new scheduling module can add tremendous strength and value to a company, primarily in the areas of gas logistics and risk management.

CFOs Speak Out: Playing LNG for All It's Worth

Neal E. Schmale, Executive VP and CFO, Sempra Energy

Neal E. Schmale, Executive VP and CFO, Sempra Energy: "Make sure you manage the risk. ... We're very careful in that area. ... We're not building the LNG plants until we have the output contracted for."

CFOs Speak Out: Enter the Mega Utility

Geoffrey S. Chatas, Executive VP and CFO, Progress Energy

Geoffrey S. Chatas, Executive VP and CFO, Progress Energy: "[We are] focusing on running efficient utilities in growing states that have favorable regulatory environments so that you have the opportunity to earn that kind of 12 to 13 percent return on equity on the utility business."

CFOs Speak Out: Growing Overseas

John R. Biggar, Executive VP and CFO, PPL Corp.

John R. Biggar, Executive VP and CFO, PPL Corp.: "We are satisfied with the level of investment in international properties, which are essentially all electricity distribution businesses."

CFOs Speak Out: Utilities: Not Interested

Stephen I. Chazen, Senior Executive VP and CFO, Occidental Petroleum

Stephen I. Chazen, Senior Executive VP and CFO, Occidental Petroleum: "I think the skills of a utility management are different than the skills of an oil management… I don't think those are related industries. I don't think the skill of selling electricity to someone's house is really the same as the skill of an oil company."

CFOs Speak Out: Making Convergence Work

Warren L. Robinson, Executive VP and CFO, MDU Resources

Warren L. Robinson, Executive VP and CFO, MDU Resources: "In the 1920s we discovered some oil and gas. ... In the mid-1980s, we really broke it out and started to develop oil and gas fields outside our region."