The Energy & Resources industry is heavily dependent on assets, and the businesses who manage them are frequently confronted expedite an ma process with the data room for due diligence by regulatory compliance, safety and environmental threats in addition to old assets, maintenance issues and budget constraints. All of these issues can have a huge impact on an organization’s performance successful external, strategic and internal success.
A comprehensive approach to risk management is crucial to guard against these risks and to ensure that a business can remain in a position to meet its customers’ demands. This article outlines the most important aspects of risk and asset management:
Counterparty risk management is a method that focuses on ensuring that key relationships, such as prime brokers and counterparties to derivatives, clearing banks, and custodians are creditworthy. It also has failsafe procedures that are designed to protect against reputational and financial damage should these partners fail. This is accomplished by vetting suppliers and ensuring that the approval process is not just to the vendor, but also to the particular service they offer.
Market risk is a potential decrease in the value of your portfolio. Asset managers as well as risk management are worried about it, but from different perspectives. Portfolio managers manage their exposures to the market to limit unintentional bets on market conditions and other variables that affect risk management, while asset management focuses on managing crowded trades, liquidity, leverage, expected volatility, and cash flow.
A strong program for managing risk and assets is crucial to avoid unexpected problems and maximising the impact of the assets of an organization. The three-line governance framework is a potent tool to identify and reduce the risks that can affect an organization’s performance.