Sense from chaos: Five secrets of energy risk management, according to the experts

We live, as the saying goes, in interesting times. As geopolitical tensions, conflict and climate-fueled catastrophes roil the world, volatility is the new normal. To navigate such a world requires a keen understanding of risk. And yet, as Trio energy risk management experts reveal in their webcast Risky Business, there is much about energy risk management that is far from intuitive.  

In the webcast’s first episode, led by Sanjin Lučić, Trio’s Director of Risk Management and Trading, four of Trio’s top analysts discuss how the energy markets of 2025 bear little resemblance to those of just a few years ago. Daily price swings of 10%—once considered impossible—are now commonplace, while volatility has doubled compared to 2015 levels. Yet, the experts note, beneath the headlines lies a more complex reality. As Europe grapples with aging infrastructure, uncertain supply routes, and the constant threat of geopolitical disruption, the stakes have never been higher.  

Lessons from the Storm 

Here, then, are five of the key risk takeaways that Trio’s experts say can help investors make sense out of chaos.  

1. Volatility has doubled, but don't be fooled by calm 

While energy markets appear to have settled since the crisis of 2022, trading professionals at Trio warn that a new paradigm has emerged. Volatility has doubled since 2015, with intraday spreads jumping from 1-1.5 pence to 3-5 pence per therm in normal conditions. Even more telling, markets now regularly see 10% daily moves that were unthinkable a decade ago. "A new market was born after the energy crisis," explains Jordan Lafford, Senior Energy Risk Manager at Trio. Lafford points out that this “new market” is a structurally choppier one, shaped by LNG-linked pricing, renewables intermittency, tighter storage, and other shocks. In other words, apparent stability could be a pause between swings, rather than a return to the old regime. 

2. Watch the storage numbers 

As markets head into Q4, storage levels have emerged as a critical metric driving both prices and sentiment. This single number can trigger market-wide reactions, given the complex factors affecting it. Norwegian maintenance affecting 30-35% of capacity, combined with the Atlantic hurricane season threatening U.S. LNG supplies, creates a precarious balance. Trio Risk Manager Stanislaw Podstawa emphasizes that storage isn't just about current levels: it's about confidence in future supply routes and their reliability. With Europe's gas supply still heavily concentrated among few sources, storage becomes an even more crucial buffer against uncertainty. 

3. Weather creates paradoxes 

Perhaps the most complex challenge facing energy risk managers is the weather. As Trio Energy Markets and Risk Manager Nicola Pollard points out, markets need wet and windy conditions to boost renewable energy production, particularly in the Nordics, where hydro stocks are currently low. However, cold clear spells that drive up demand can quickly deplete gas storage, causing problems with pricing. This creates a complex risk environment where the same weather patterns can be both beneficial and detrimental to market stability. 

4. Diversification isn't optional 

The discussion repeatedly returns to Europe's continued reliance on concentrated supply sources, suggesting that lessons from 2022 haven't been fully implemented. With aging nuclear fleets and increasing dependence on U.S. LNG, the risks of supply concentration are growing. Political changes in supplier countries could dramatically affect availability, while infrastructure vulnerabilities—from pipeline maintenance to hurricane threats to LNG terminals—create additional risks. Trio’s experts stress that true energy security requires a deliberately diversified supply portfolio. 

5. In uncertain times, play defense  

In the final analysis, Trio’s experts converge on a clear message: now is the time for defensive positioning. With markets in what analysts call backwardation (future prices lower than current prices), there's an opportunity to lock in forward positions. Rather than trying to time the market perfectly, the recommendation is to secure positions two to three years out while prices are relatively stable. "If you can be cheaper than your years, mix it up," advises Lučić, suggesting a balanced approach that leaves some flexibility while ensuring baseline security. The key, Lučić says, is to act before Q4 when weather-driven volatility typically increases. 

Risk round-up 

As energy markets navigate what appear to be calmer waters, the Trio’s experts emphasize that appearances can be deceiving: while headlines suggest a return to normality, the fundamentals have shifted dramatically. Today's energy markets demand a more sophisticated approach to risk management, combining careful attention to storage levels, weather patterns, and supply diversification. The key to success lies in defensive positioning and proactive planning, rather than reactive responses to market shifts. As Sanjin Lučić concludes: "Don't wait until Q4 and the potential cold snap."  

In the new paradigm of elevated volatility and complex interdependencies, preparation and prudence are the watchwords for energy risk managers.