GROUP 4

CURRENT ASSET
MANAGEMENT
 THE IMPORTANCE OF
01.
ASSET MANAGEMENT

02. BENEFITS

03. UNDERSTANDING RISKS

TABLE OF 04. STRATEGY AND PLANNING
CONTENT 05. DECISION MAKING
Topics to be discussed
06. LIFECYCLE DELIVERY
ACTIVITIES
WHAT IS CURRENT
ASSET MANAGEMENT?
Is the handling of the current assets of a
company. Any assets that a company or
business has that is the equivalent of cash
or can be liquidated into cash in the period
of a year is considered a current asset.
THE IMPORTANCE
OF ASSET
MANAGEMENT
ALLOWS THE ORGANIZATION TO KEEP TRACK OF
ALL THEIR ASSETS.
It can tell where the assets are located, how they are used, and
when changes were made to them.

BRINGS MORE EFFICIENT OPERATION.

It allows an organization to understand the capabilities of its
assets, and how they can be operated in the most effective
manner.
THE IMPORTANCE
PROPER ASSET MANAGEMENT CAN HELP OPTIMIZE YOUR
OF ASSET
OPERATIONS THAT INCLUDE THE PLANNING, MANAGEMENT
RESOURCES USE, AND IN THE IMPLEMENTATION OF THE
MANAGEMENT PROGRAM.
BENEFITS OF
ASSET
MANAGEMENT
IMPROVED ASSET PERFORMANCE - BY ACTIVELY
MANAGING ASSETS AND IMPLEMENTING
MAINTENANCE AND REPAIR PROGRAMS, ASSET
MANAGEMENT CAN HELP ENSURE THAT ASSETS BENEFITS OF
PERFORM AT THEIR BEST, DELIVERING OPTIMAL
ASSET
VALUE AND PERFORMANCE.
MANAGEMENT
REDUCED RISK: ASSET MANAGEMENT CAN HELP
IDENTIFY POTENTIAL RISKS ASSOCIATED WITH
ASSETS AND IMPLEMENT MEASURES TO MITIGATE
THEM, REDUCING THE LIKELIHOOD OF ASSET FAILURE, BENEFITS OF
ACCIDENTS, AND OTHER PROBLEMS. ASSET
MANAGEMENT
INCREASED ASSET LIFESPAN: BY MANAGING ASSETS
EFFECTIVELY AND IMPLEMENTING PREVENTATIVE
MAINTENANCE PROGRAMS, ASSET MANAGEMENT CAN
HELP EXTEND THE USEFUL LIFE OF ASSETS, REDUCING BENEFITS OF
THE NEED FOR REPLACEMENT AND LOWERING TOTAL ASSET
COST OF OWNERSHIP.
MANAGEMENT
COST SAVINGS: BY OPTIMIZING ASSET UTILIZATION
AND REDUCING MAINTENANCE COSTS, ASSET
MANAGEMENT CAN HELP ORGANIZATIONS SAVE
MONEY OVER TIME, IMPROVING PROFITABILITY AND
BENEFITS OF
FINANCIAL PERFORMANCE. ASSET
MANAGEMENT
REGULATORY COMPLIANCE: EFFECTIVE ASSET
MANAGEMENT CAN HELP ORGANIZATIONS COMPLY
WITH REGULATIONS AND STANDARDS RELATED TO
ASSET MANAGEMENT, REDUCING THE RISK OF FINES,
BENEFITS OF
PENALTIES, AND LEGAL LIABILITY. ASSET
MANAGEMENT
UNDERSTANDING
RISKS OF
CURRENT ASSET
MANAGEMENT
RISK OF LOSS
If you buy any investment, be it a fund, an equity or
bond, there is no guarantee that you will get all of
your money back when you decide to sell.

VOLATILITY
The more volatile an asset is, the more the price will
UNDERSTANDING
change. The obvious risk is that you buy an RISK
investment while the price is high and sell it when the
price is lower.
COUNTERPARTY OR CREDIT RISK
Even when you invest in a bond, structured product
or even a cash deposit that appears to guarantee
that you will not lose any money, there is a risk that
you could, if the company that you are effectively
lending money to is unable to repay its debts.

INFLATION RISK UNDERSTANDING

This is the risk that your money will not buy as much RISK
in the future as it does now, due to the effect of
inflation on the price of the goods that you want to
buy.
FIXED TERM RISK

Fixed term risk comes in two parts: opportunity risk,

where you may find that you could earn a higher
return from another investment but cannot do so
because your money is “locked up”; and the risk that
a change in your circumstances could force you to
withdraw your investment. This might not be possible,
UNDERSTANDING
or could involve significant financial penalties. RISK
MARKETABILITY RISK
In some circumstances, there may be no buyer
available when you wish to sell your investment. This
is a greater risk when you invest in smaller companies
whose shares are not traded as much as those of
larger companies and there is lower investor demand. UNDERSTANDING
It is also a risk with some bonds and structured
products where there may not be a ready market.
RISK
CONCENTRATION RISK
This risk occurs when you have too much of your
money concentrated in one area, for example all in
one particular stock or all in one industry or sector
which could all fall in value at the same time, as a
result of a single event.

CURRENCY EXCHANGE RISK UNDERSTANDING

If you invest in an asset that is priced in a currency RISK
that is different to your base currency, the volatility of
the exchange rate will add to the volatility of the
asset.
STRATEGY AND
PLANNING
Developing and implementing a strategic asset
management plan (SAMP) will allow for a detailed
understanding of what physical assets are currently
held, their value, future value, and costs associated STRATEGY AND
with maintaining them or disposing of them.
PLANNING
 1
Asset management is a strategic approach to how a
company conducts business, reaches decisions, and
processes, uses, and communicates information.

Will allow you to understand how effective your assets are

being utilized.
The value over the entire lifecycle of an asset can be LEARN HOW A
determined and planned for.
STRATEGIC ASSET
You can dispose of costly assets that are not deemed
MANAGEMENT PLAN
necessary and generate funding from their sale.
CAN HELP.
 2
Before you can proceed in making a strategic asset
management plan you will need to collect information
about the assets that you will be planning for.

Collect information about which assets your

organization currently holds.

Think of how well your assets are serving the goals

COLLECT
of your organization or individual department. INFORMATION
ABOUT ASSETS
 3
After you have taken an evaluation as to how
important and how effective certain assets are to
your organization you will need to prioritize the
assets.

Some assets may be necessary to hold but may

require upgrades.
DECIDE WHICH ASSETS
Certain assets may be deemed non-essential or WILL RECEIVE YOUR
extraneous and may not require further holding by FOCUS.
your organization.
 4
Once you have a good understanding of which assets
you need to focus on and in what order of
importance you can begin to build your strategic
asset management plan.

Study necessary acquisitions

Plan for asset operations. CREATE
Plan for maintenance of assets.
STRATEGIES FOR
Prepare for disposal of old assets.
EACH ASSET.
DECISION
MAKING
ASSET MANAGEMENT
DECISIONS & DECISION-
MAKING
Asset management decisions are made at all
levels of the organization. Top management
is usually responsible for strategic decisions,
while middle management is usually
responsible for tactical decisions and
frontline management for operational
decisions.
DECISION-MAKING
CRITERIA

Decision-making criteria establish the basis

on which decisions are to be made. A risk-
based, value-based criteria means that the
criteria considers both that value of the
decision to the stakeholders, ie. the impact of
the decision being made (or not made) and
the urgency wit which it is to be made.
DECISION-MAKING
CRITERIA

The other element of risk-based, is that the

criteria should clearly communicate the
urgency of the decision, so that the risks
associated with deferral of decisions are
clear to stakeholders. Some ways in which the
urgency of the decision may be
communicated include asset condition,
remaining useful life and asset performance.
DECISION-MAKING
PROCESSES

Decision-making processes are necessary to

ensure that decisions are auditable
(traceable), repeatable and reproducible
(Greeman, 2018). In doing so, the
organization can provide assurance to
stakeholders that optimal decisions are being
made in pursuit of the organization’s goals
and objectives.
LIFECYCLE
DELIVERY
ACTIVITIES
WHAT IS ASSET
LIFECYCLE MANAGEMENT?
Is a technique of asset management where
facility managers maximize the usable life of
assets through planning, purchasing, using,
maintaining, and disposing of assets. The
main aim of asset lifecycle management is to
reduce costs and increase productivity.
PLANNING AND BUDGETING
Planning involves setting goals and objectives and outlining
the strategies and actions needed to achieve those goals.
Budgeting, on the other hand, involves creating a financial
plan for a specific period that outlines how resources will be
allocated to achieve the goals set in the planning phase.
1
ASSET LIFECYCLE
MANAGEMENT
RESOURCE ALLOCATION
Resource allocation is the process of managing
and allocating assets to support a company or
organization's strategic goals.
2
ASSET LIFECYCLE
MANAGEMENT
OPERATION AND MAINTENANCE
In this phase - the longest portion of the typical asset
lifecycle - you're using and working to gain maximum
value from the items on your asset register. During
this phase is tracking how your assets are performing,
so you can draw accurate conclusions about whether
they're up to the standard you require.
3
ASSET LIFECYCLE
MANAGEMENT
DISPOSAL
It comes when you conclude that the asset no longer
holds any value for the company and therefore isn’t
financially viable.
4
ASSET LIFECYCLE
MANAGEMENT
 REFERENCES:
The benefits of asset management | The Jotform Blog
Definitions and Benefits of Asset Management - NEWEA - New England Water
Environment Association
Asset & Investment Management Risks | Close Brothers Asset Management
(closebrothersam.com)
What Is Asset Management? Why It's Necessary for Business Success (g2.com)
What is resource allocation? (techtarget.com)
4 Key Stages of Asset Management Life Cycle | PECB
Asset Lifecycle Management: Guide to Optimizing Asset Potential (facilio.com)