The Energy & Resources industry is asset-intensive, and the organizations who manage them are frequently confronted with compliance issues as well as environmental and safety threats in addition to ageing assets, maintenance issues and budgetary limitations. These factors could have a huge impact on an organization’s operational successful external, strategic and internal success.
A comprehensive strategy for managing risk is essential to protect against these threats and ensure that businesses can keep meeting the demands of its customers. This article provides a list of the most important areas of risk and asset management:
Counterparty risk management focuses on ensuring that important relationships (such as prime brokers derivative counterparties, clearing banks and custodians) are financially sound, and includes the implementation of safeguards that are failsafe to reason antivirus review protect against reputational and financial damage caused by the insolvency of those partners. This is done by vetting the vendors and ensuring that the approval process extends not only to the vendor, but also to the particular service they offer.
Market risk is the possibility of a loss in the value of portfolios. Asset managers as well as risk management are concerned about this, but from slightly differing perspectives. Portfolio managers manage their exposure to markets to reduce unintentional betting on markets and other elements while risk management concentrates on managing crowded trades, liquidity, leverage, expected volatility, and cash flow.
A solid risk and asset management plan will aid an organization in avoiding unexpected problems and maximize the use of its assets. The three lines of defense governance framework is a successful approach to identifying and mitigating the risks that can affect the organization’s performance.