Select Page

The Energy & Resources industry is asset-intensive, and the organizations that manage them are typically confronted with regulatory compliance in the form of environmental, safety and safety concerns and aging assets, maintenance issues, and budget limitations. Each of these aspects could have an impact on the external, operational and strategic success of an organization.

A comprehensive risk management approach is critical to protecting against these threats and ensure that a business can continue to meet the needs of its customers. This article outlines the most important areas of risk and asset management:

Counterparty risk management is a method that focuses on ensuring key relationships, like prime brokers and counterparties to derivatives clearing banks, and custodians, are creditworthy. It also has failsafe procedures that are designed to guard against reputational and financial harm if these partners fail. This is achieved by vetting vendors and ensuring that the approval process does not only apply to the vendor, but also the service they provide.

Market risk is the potential for a decrease in the value of your portfolio and is a common issue that asset managers as well as risk managers are concerned with however from slightly different perspectives. Portfolio managers manage their exposure to markets to limit unintentional betting on markets and other elements that affect risk management, while asset management focuses on regulating crowded trades liquidity, leverage, volatility and cash flow.

A well-designed risk and asset management program will help a company avoid unexpected challenges and maximize the value of its assets. The three-line governance framework is an effective tool for identifying and minimizing the risks that could negatively impact the performance of an organization.