The Institute of Risk Management (IRM) has released a new report which provides insight and thought leadership for risk managers operating in the energy sector (including oil and gas, energy and renewables).
In preparing for ‘Fuelling the Debate: Latest Risk Management Trends in the Energy Sector 2019’ the IRM surveyed roughly 50 industry leading specialists to provide advice on how risk managers could improve their performance and relevance across a range of topics – from safety and sustainability to improving risk maturity and building effective risk cultures.
Coupled with their own research and findings, the report states that the energy sector is currently undergoing rapid change.
According to the survey, many oil and gas companies are looking to expand into new projects and territories, and even renewable energy sources, following several years of belt tightening and cost cutting.
Cost control and safety naturally remain key areas of focus, but the survey found that businesses plan to invest in new projects, as they are confident in achieving profits despite a long period of low oil prices.
Strategic risks, the global economy and an evident skills gap are considered top risks to the report’s respondents.
Only 27 per cent of industry specialists surveyed rated green energy as an area of concern over the next five years, raising the question as to whether the sector has fully digested the regulatory changes that could potentially see electric cars as the norm after 2035.
Chairman of the IRM and Risk Management Director, Socrates Coudounaris, CFIRM, commented that excellence in risk management requires a strong understanding of general concepts and techniques but also an appreciation of the detailed risk landscape sectors.
“It is particularly interesting to note that one of the conclusions of this document is that there is great scope for raising levels of risk maturity in this globally important sector,” he said.
“This will require attention to various aspects of risk management and particularly to competence, training and education, raising them to world-class standards. The IRM stands ready to play its part in this process,” Mr Coudounaris added.
The survey also assessed the level of risk maturity across the industry. The results are a little disheartening, as the energy sector scored only three out of five.
Domenic Antonucci, CMIRM, described this as ‘…disappointing for a sector with the history, sophistication, management talent and resources of oil and gas’.
Lastly, some risk managers described a problematic lack of resources and a failure of the board to provide the right tone at the top.
Only about 40 per cent of respondents, for example, said they had specialist ERM software, something that (whilst not essential) is generally expected from major energy companies for properly implementing risk management across large, geographically dispersed organisations.
In a bid to improve the global energy sector’s risk management, the IRM will soon commence initiatives such as publishing individual expert insights and articles as well as continuing to work towards establishing a regular maturity benchmarking assessment of the industry with fixed criteria.
The IRM’s ‘Fuelling the Debate Report: Trends, Survey Report and Findings for the Energy Industry 2019’ can be accessed here.