The Energy & Resources Industry is asset-intensive. Organizations who manage these assets are typically confronted with regulatory compliance as well as environmental and safety risks as well as aging equipment, maintenance issues, and budgetary constraints. These factors could be a major influence on an organization’s internal, external and strategic success.
A comprehensive risk management plan is crucial to protect against these threats and ensure that a business can continue to meet the demands of its clients. This article outlines the most important aspects of asset and risk management:
Counterparty risk management is focused on ensuring that important relationships (such as prime brokers derivative counterparties, clearing banks and custodians) are creditworthy, and it includes implementing failsafe procedures that protect against reputational and financial damage caused by the insolvency of these partners. This is accomplished by vetting vendors, and ensuring the approval process does not just apply to the vendor, but as well to the service they provide.
Market risk is a potential loss in the value of portfolios. Both asset managers and risk management are concerned about it, but from slightly different perspectives. Portfolio managers manage their market exposures to reduce unintentional bets on the market and other factors, while risk management focuses on managing crowded trades, liquidity, leverage, expected volatility and cash flow.
A robust program for managing risk and assets is crucial to avoid unexpected issues and maximizing the impact of an organization’s https://expertalmanagement.de/2021/09/01/what-is-voip-a-guide-for-business assets. The three-line governance framework is a useful instrument for identifying and minimizing the risks that could negatively impact an organization’s performance.