The Energy & Resources industry is asset-intensive, and the organizations who manage them are frequently faced with regulatory compliancy, safety and environmental threats in addition to aging assets, maintenance issues and budget restrictions. All of these issues can be a major influence on an organization’s internal, external and strategic success.
A comprehensive risk management plan is essential to guard against these risks and ensuring that a company is able to meet the demands of its customers. This article outlines the most important areas of risk and asset management:
Counterparty risk management is a procedure that focuses on ensuring that key relationships, such as prime brokers and counterparties to derivatives, clearing banks, and custodians are creditworthy. It also has failsafe procedures that are designed to guard against financial losses or reputational damage should these partners https://expertalmanagement.de/2021/12/29/the-importance-of-asset-management fail. This is done by vetting vendors and ensuring that the approval process is not only to the vendor but also to the specific service they provide.
Market risk is the possibility of a decrease in the value of your portfolio. Both asset managers and risk management are concerned about it, however from different perspectives. Portfolio managers manage their exposures to the market in order to minimize unintended bets on the market and other factors, while risk management focuses on managing crowded trades, liquidity, leverage, volatility, and cash flow.
A robust asset and risk management plan is essential for avoiding unexpected challenges and maximising the value of an organization’s assets. The three lines of defense governance framework is an effective method for identifying and reducing the risks that could impact the performance of an organization.