The Energy & Resources Industry https://expertalmanagement.de/2021/12/29/the-importance-of-asset-management/ is asset-intensive. Organizations who manage these assets are frequently confronted with regulatory compliance, safety and environment threats, aging equipment, maintenance issues, and budget limitations. Each of these aspects could have a significant impact on the operational, external and strategic performance of an enterprise.

A comprehensive risk management approach is essential to guard against these risks and ensuring that a company can continue to meet the demands of its clients. This article outlines the most important aspects of asset and risks 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 financially sound, and includes the implementation of safeguards that are failsafe to protect against reputational and financial damage resulting from the failure of those partners. This is achieved by vetting vendors, and ensuring that the approval process does not just apply to the vendor but also the services they provide.

Market risk is the possibility for a decline in the value of a portfolio and is a common challenge that both asset managers and risk managers have to deal with but from slightly different perspectives. Portfolio managers are focused on managing their market exposures to reduce unintended market and factor bets, whereas risk managers try to manage overcrowded leverage and trades, as well as to monitor liquidity, expected volatility and cash flow.

A strong program for managing risk and assets is essential for avoiding unexpected challenges and maximising the value of an organization's assets. The three lines of defense governance framework is a successful approach to identifying and reducing the risks that can impact an organization's success.