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

The Energy & Resources Industry is asset-intensive. Companies who manage these assets are typically confronted with regulatory compliance, safety and environment threats, aging equipment maintenance issues, as well as budgetary limits. These factors could possibly have a significant impact on an organization’s operational as well as its external and strategic success.

A well-rounded risk management strategy is essential to guard against these risks and ensuring that the company continues to meet the demands of its customers. This article provides the major areas of asset and risk 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 reliable and creditworthy, and it involves implementing safeguards that are failsafe to protect against reputational or financial damage from the failure of these i thought about this partners. This is accomplished by vetting suppliers and ensuring that the process of approval extends not just to the vendor but also to the particular service they offer.

Market risk is a potential loss in the value of portfolios. Both asset managers and risk management are concerned about this, but from slightly different perspectives. Portfolio managers manage their exposure to markets to reduce unintentional betting on markets and other elements and risk management focuses on tackling crowded trades, liquidity, leverage, volatility, and cash flow.

A solid asset and risk management plan will help an organization avoid unexpected problems and maximize the impact of its assets. The three lines of defense governance framework is a successful method for identifying and reducing the risks that can impact the success of an organization.

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