BY Fraser Tennant
The global energy sector is undergoing rapid change following years of cost cutting, with many oil and gas companies expanding into new projects and territories, according to a new report by the Institute of Risk Management (IRM).
In 'Fuelling the Debate: Trends, Survey Report and Findings for the Energy Industry 2019', the IRM provides insight and thought leadership for risk managers operating in the sector, including oil and gas, energy and renewables, and offers advice on how they can improve their performance and relevance across a range of topics – from safety and sustainability to improving risk maturity and building effective risk cultures.
According to the report, which is based on a survey of around 50 energy sector specialists, cost control and safety are key areas of focus, with businesses planning to invest in new projects because they are confident of achieving profits despite a long period of low oil prices.
Furthermore, strategic risks, the global economy and a skills gap are considered top risks by survey respondents, although only 27 percent said that green energy was likely to be an area of concern over the next five years.
“Excellence in risk management requires a strong understanding of general concepts and techniques but also an appreciation of the detailed risk landscape in particular sectors,” said Socrates Coudounaris, chairman of the IRM. “Among the report’s conclusions is that there is great scope for raising levels of risk maturity in the energy sector. This will require attention to various aspects of risk management and particularly to competence, training and education, raising them to world class standards.”
Risk managers also expressed concern over a lack of resources and a failure of the board to provide the right tone at the top. For example, just 40 percent of respondents said they had access to specialist ERM software.
In a bid to improve the global energy sector’s risk management outlook, the IRM has announced a series of initiatives, such as publishing individual expert insights and articles, as well as continuing to work towards establishing a regular maturity benchmarking assessment of the sector with fixed criteria.
Mr Coudounaris concluded: “We intend to build further on these initiatives and conduct more specialist academic research. We also intend to develop an ongoing special interest group for the energy sector that will support risk professionals in the field.”