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

The Energy & Resources industry is highly asset-intensive, and the companies who manage them are frequently confronted with compliance issues security and environmental risks as well as aging assets, maintenance issues and budget limitations. These factors can have a significant impact on the operational, external and strategic success of an enterprise.

A comprehensive strategy for risk management is essential to safeguard against these risks and ensure that a business will keep up with the needs of its customers. This article will highlight the key areas 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 that includes implementing safeguards that are failsafe to protect against reputational or financial damage resulting from the failure of these partners. This is done by vetting suppliers and ensuring that the approval process extends not just to the vendor but also to the particular service they provide.

Market risk is a possibility of loss in the value of portfolios. Both asset managers and risk management are concerned about it, however from different perspectives. Portfolio managers manage their market exposures to limit unintentional bets on the market and other factors while risk management concentrates on tackling crowded trades, liquidity, leverage, expected volatility, and cash flow.

A solid risk and asset management plan will help an organization avoid unexpected problems and maximize the value of its assets. The three lines of defense governance framework is a reliable approach to identifying and mitigating the risks have a peek at this website that can affect the success of an organization.