Being part of a high-risk industry, oil and gas companies have been at the forefront of operational/process safety risk management for decades.
Enterprise Risk Management (ERM), on the other hand, has had less focus with some organisations doing it well, few dabbling in it, and others not having implemented it at all.
Alongside some major high-profile incidents, the past few years have been difficult for the industry which was heavily impacted by the oil price crash which saw average prices of around $90-100 drop to under $30 at one point. The dramatic fall in prices have resulted in projects being postponed or cancelled, staff being cut and most organisations embarking on cost-cutting exercises.
Oil price crashes are precisely the type of strategic risks that ERM tends to focus on and whilst the worst seems to be over, there are many challenges and strategic risks ahead for the oil industry, including the risk of oil prices not recovering as expected.
One only needs to look at reports from the past week to see that some even believe that oil prices could fall further to $10 as a result of the major move by many countries to shift to electric vehicles. Are companies prepared for this risk? Are the organisations adjusting to this new reality?
This is an area where proactive ERM can benefit companies by allowing more informed and dynamic decision making, providing a more resilient organisation and helping identify major opportunities for the future.
Institute of Risk Management (IRM), a professional body based in London, is an independent, not-for-profit organisation that champions excellence in managing risk to improve organisational performance.
IRM does this by providing internationally recognised qualifications and training, publishing research and guidance, and raising professional standards across the world. Its members work in all industries, in all risk disciplines and across the public, private and not-for-profit sectors.
In a bid to support, encourage and empower the industry to take further steps to improve its risk management maturity, IRM is undertaking a major oil and gas initiative. The initiative was kicked off with a survey to understand what oil and gas companies are doing with regard to risk management.
The survey is divided into several parts covering aspects such as current and future activities and focus, risk management maturity within the industry and major risks that are of concern to the industry.
The result of the survey will allow companies to benchmark their risk programme across the industry. It will also allow IRM to use this data for the thought-leadership publication that it has planned to publish soon.
This thought-leadership publication will address major gaps and concerns of the industry with inputs from the industry and risk experts. Furthermore, IRM believes that communication and engagement is critical in the oil and gas sector and hence is introducing an oil and gas Special Interest Group, which has already received interest from Amec Foster Wheeler, BP Europa, DNV Oil & Gas, MOL Group, PETRONAS, PremierOil, and others to participate. This group is intended to share best practices and ideas whilst working together to drive risk management in the industry by essentially acting as a working group.
IRM has also developed an ‘Oil and Gas Fundamentals of Risk Management’ training course that aims to increase awareness and understanding of ERM within the industry. The three-day course will be held in Dubai, UAE, during 15-17 April 2018.
