The Energy & Resources Industry is an asset-intensive. Organizations that manage these assets are typically confronted with compliance issues environmental and safety threats as well as aging equipment maintenance issues, as well as budget restrictions. Each of these aspects can potentially have a large impact on an organization’s operational external and strategic performance.
A comprehensive risk management plan is essential to guard against these risks and ensuring that a business can continue to meet the demands of its clients. This article outlines the most important areas of asset and risk management:
Counterparty risk management is a procedure that focuses on making sure key relationships, such as prime brokers, counterparties to derivatives, clearing banks, and custodians are creditworthy. It is also a part of failsafe methods that are designed to safeguard against reputational and financial harm if these partners fail. This is done by vetting the vendors, and ensuring the approval process doesn’t just apply to the vendor but as well to the services they offer.
Market risk is the possibility for a decline in the value of your portfolio and is a common issue that asset managers and risk managers deal with but from slightly different perspectives. Managers why not try these out of portfolios focus on managing their market exposures to reduce unintended market and factor bets, while risk managers are attempting to manage overcrowded leverage and trades, and to examine liquidity, expected volatility and cash flow.
A solid asset and risk management program can aid an organization in avoiding unexpected challenges and maximize the use of its assets. The three lines of defense governance framework is a reliable approach to identifying and reducing the risks that can affect the organization’s performance.