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

The Energy & Resources Industry is an asset-intensive. Companies that manage these assets are often confronted by compliance issues with regulatory requirements, safety and environment threats and equipment that is old maintenance issues, as well as budgetary limitations. These factors could be a major influence on an organization’s internal successful external, strategic and internal success.

A comprehensive risk management approach is essential to guard against these risks and ensuring that the company continues to meet the demands of its customers. This article will highlight the key areas of asset and risk management:

Counterparty risk management focuses on ensuring that important relationships (such as prime brokers, derivative counterparties, clearing banks and custodians) are creditworthy, and includes the implementation of safe dig this procedures to safeguard against reputational and financial damage from the failure of these partners. This is done by vetting vendors and ensuring that the approval process extends not only to the vendor but also to the specific service they provide.

Market risk could lead to a loss in the value of portfolios. Both asset managers and risk management are concerned about this, but from different perspectives. Portfolio managers manage their market exposures to limit unintentional bets on markets and factors that affect risk management, while asset management focuses on regulating crowded trades liquidity, leverage, volatility, and cash flow.

A robust program for managing risk and assets is essential for avoiding unexpected challenges and maximizing the value of an organization’s assets. The three lines of defense governance framework is a successful method of identifying and reducing the risks that can impact an organization’s success.

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