The Energy & Resources Industry is asset-intensive. Organizations that manage these assets are often confronted with regulatory compliance as well as environmental and safety risks and equipment that is old maintenance issues, as well as budgetary limitations. These factors can have a significant impact on the external, operational and strategic success of an enterprise.
A well-rounded risk management strategy is crucial to protect against these threats and ensure that a company is able to meet the needs of its customers. This article highlights the main areas of risk and asset management:
Counterparty risk management focuses on ensuring that important relationships (such as prime brokers and derivative counterparties, as well as clearing banks and custodians) are financially sound, and includes the implementation of security measures that guard against reputational and financial damage caused by the insolvency of those partners. This is done by vetting suppliers and ensuring that the approval process applies not just https://expertalmanagement.de/2020/12/26/vermogensverwaltung/ to the vendor, but also to the specific service they provide.
Market risk could lead to a decline in portfolio value. Both asset managers and risk management are concerned about this, but from slightly different perspectives. Portfolio managers are focused on managing their market exposures to limit unintentional market and factor bets, while risk managers seek to manage the influx of trades and leverage, and to examine liquidity, expected volatility and cash flow.
A solid asset and risk management plan is essential for avoiding unexpected challenges and maximizing the value of an organization’s assets. The three-line governance framework is a potent tool for identifying and minimizing the risks that could negatively impact the performance of an organization.