In November 2001, Enron, then the world’s largest energy trader, collapsed with $62 billion of assets. Based in Houston, the company was one of America’s 10 largest, and became its biggest to go bankrupt at the time.
Originally published March 2017
Its collapse left 21,000 employees looking for jobs, and came after the business revealed shaky accounting, too much borrowing, and an unwillingness to share information honestly with its investors.
Novera Khan had just left university in Houston in 2001, and was working at Reliant Energy, starting to forge a career in energy trading. It was an inauspicious start, as the industry that she was moving into was rocked from top to bottom. But if it wasn’t for Enron, she might never have found her way into risk management, where she has since excelled.
She joined Duke Energy as a senior risk analyst in Houston in January 2002, just months after the Enron failure.
“The four-plus years I spent at Duke on the trading floors, working through various roles in risk management, were really useful, precisely because it was around the time of the Enron event,” she says. “That really shook the industry up, and allowed newcomers like me to see upfront the importance of risk management, and how it could add value.”
She was hooked: “Very early on I got passionate about the whole topic of risk management,” says Khan, who is now chief risk officer for Uniper SE, and a board member, at Uniper Global Commodities, based in Germany. “I was not really into policing and controlling, which is the way the industry swung after Enron, but I was passionate about enabling the business to make money.”
In 2006, by now risk manager for the western US and Canadian gas portfolio at Duke, Khan left for BG Group, joining a small start-up operation as the UK company sought to establish its brand in Houston. Still in risk management, Khan was tasked with helping to build that function, and she led an initiative to design, test and implement a new risk reporting tool.
After five years with BG in Houston, she was ready for a move: “BG was an excellent run for me,” says Khan. “By the time I left, the function had grown into a very credible and very well-respected business in the energy space in Houston, and we were four to five hundred people by then, so had achieved incredible growth and learning in five years. I was looking for opportunities internationally.”
Khan, who was born and raised in Pakistan, had been living and working in Houston since university, and says that she felt global mobility was the next natural step. “I was starting to see a lot of correlation between the people willing to take on board those international risks in their careers, and the opportunities they were given to move up and progress their careers,” she says.
Khan spent two years as a risk manager with BG in the UK, and was then headhunted for a role in Germany with then E.ON which has recently spun off its energy generation and trading business into a new start as Uniper. “I never thought I would have considered it,” she says. “That was, for me, another one of those leaps of faith, coming with the right intentions, and taking a risk.”
Now five years into the role, Khan has been chief risk officer for the MDAX company, with a seat on the board of its trading arm, since February 2016. Before that, she led the market risk department at E.ON Global Commodities, and before that, led the gas, oil and LNG risk team.
She has enjoyed the perspective of being a board member, with a role in running the company as a whole. “I think the competitive edge that I have had in my career has been that I actually like risk,” says Khan. “I’m not a risk manager that is opposed to risk. Of course, I’m disciplined, and I’m analytical, but really developing a good feeling for the opportunities that you need to pursue is what’s important, both on a personal level, and for the business.”
When it comes to hiring talent, the role of a risk professional is now so nuanced that Khan says it can be difficult to fill roles. She says: “You need to hire people for these roles who are able to wear multiple hats – they need to be able to think commercially, to link into external networks, and to be able to do technically quite challenging work at different granularity levels.”
Risk managers also need to be good with people, says Khan: “You need to be a good people person, because you are sitting in the middle-office space, and you are the glue to so many interfaces. You are expected to be able to speak to lawyers, HR, IT, finance, traders, marketers, board members and risk committee members, and the ability to manage those very different sets of interfaces takes a special person with a real desire to work those relationships.”
There are not enough senior women working in commodities risk management, Khan says, and that is not just a result of a shortage of people entering the industry out of school. She says there is a need to work on encouraging young women into a career in risk, but there is also an important role for senior women in the industry to put themselves forward as role models.
“We need to do a lot better at the entry level, bringing people in,” says Khan, “but from a boardroom level, we also need to be mindful of the working environments that we are creating, and how we afford people the opportunity to have multi-faceted lives and pursue careers in this business. And then those of us that have done it need to demonstrate, by showing that we can make those things work.”
Much has changed in the commodity risk management arena since Khan began her career in Houston. She says: “When I started, Enron was really fresh in people’s minds. Of course the industry has been shaken, and there have been many structural changes, and meanwhile commodity markets have become much more global in nature.”
She adds, “The role of risk managers has also evolved and developed, and the appreciation for risk management has been growing. Maybe a decade ago it was seen as the department that you must have in order to protect against the bad headlines. Over time, people have come to realise that the companies that are successful in the long run are those that understand risk and reward: there is no risk without reward, and certainly no reward without risk. Those connections have become much more obvious, and that’s a place where I’ve been able to add a lot of value.”
Sixteen years on, and half a world away, Enron may be a distant memory, but it has shaped Khan’s career and created the CRO she is today.