Three Lines of Asset and Risk Management for the Energy & Resources Industry

The Energy & Resources industry is heavily dependent on assets, and the businesses who manage them are frequently confronted with regulatory compliance, safety and environmental threats, aging assets, maintenance issues, and budgetary restrictions. Each of these aspects can potentially have a large impact on the organization’s operational successful external, strategic and internal success.

A comprehensive risk management https://expertalmanagement.de/2021/12/29/risk-assessment-in-business plan is critical to protecting against these risks and ensuring that the company continues to meet the demands of its customers. This article outlines the most important aspects 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 reliable and creditworthy, and includes the implementation of security measures that guard against reputational or financial damage caused by the insolvency of these partners. This is accomplished by vetting vendors and ensuring that the process of approval extends not only to the vendor, but also to the particular service they provide.

Market risk could be the reason for a decrease in the value of a portfolio, and it is a frequent issue that asset managers as well as risk managers have to deal with but from different perspectives. Portfolio managers focus on managing their exposure to markets to reduce unintended market and factor bets, whereas risk managers attempt to manage crowded leverage and trades, as well as to be aware of the liquidity as well as cash flow.

A solid asset and risk management plan will aid an organization in avoiding unexpected problems and maximize the use of its assets. The three-line governance framework is an effective tool for identifying and minimizing the risks that could impact an organization’s performance.

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