The Energy & Resources Industry is heavily dependent on assets. Companies who manage these assets are often confronted by compliance issues with regulatory requirements, safety and environment threats as well as aging equipment maintenance issues, and budgetary restrictions. Each of these aspects could have an impact on the operational, external, and strategic success of an organization.
A well-rounded risk management strategy is vital to safeguard against these risks and ensuring that a company can continue to meet the demands of its clients. This article highlights the main areas of asset and risk management:
Counterparty risk management is focused on ensuring that the relationships with key players (such as prime brokers, derivative counterparties, clearing banks and custodians) are financially sound, and it involves implementing safe procedures to safeguard against financial loss or reputational damage from the failure of those partners. This is accomplished by vetting suppliers and ensuring that the approval process applies not just to the vendor, but also to the particular service they offer.
Market risk is the potential for a decrease in portfolio value, and it is a problem that asset managers and risk managers are concerned about but from slightly different perspectives. Portfolio managers manage their exposures to the market to reduce unintentional betting on markets and other elements while risk management concentrates on tackling crowded trades, liquidity, leverage, expected volatility, and cash https://expertalmanagement.de/2021/06/19/die-vorteile-der-nutzung-eines-datenraums-fur-due-diligence/ flow.
A solid asset and risk management program can enable an organization to avoid unexpected problems and maximize the benefit of its assets. The three-line governance framework is a potent tool to identify and reduce the risks that could negatively impact the performance of an organization.