Five areas of real concern for the energy industry
This year the energy industry is facing possibly its greatest challenge in 50 years as oil prices plunge and inventories reach record levels.
For the foreseeable future, Capex discipline and operating cost reductions are going to be primary drivers for company directors in an industry beset by a global oil glut that shows no sign of abating.
How can energy companies navigate their way through this harsh business environment? It’s essential that they adopt business strategies that not only guarantee their survival but also minimise the risks involved in this new landscape, both to their people and their balance sheets.
There are five areas where new approaches to risk management and workforce solutions are being developed that may help the industry develop such strategies.
OPTIMISING HUMAN CAPITAL RISK
The debate today is less about a war for talent and more about re-structuring, right sizing, sustainable workforce planning, managing performance and reducing workforce costs.
MITIGATING CYBER RISK EXPOSURE
A proper risk quantification process is now essential if energy companies are to approach the decisions about addressing this exposure with the most effective deployment of capital.
MANAGING REGULATORY RISK
Quick access to protection for Directors is now required in the event of a regulatory breach and a consequent investigation or claim against them.
NAVIGATING THE GEO-POLITICAL LANDSCAPE
As new geo-political threats are identified so must scenario building, modelling and risk mitigation measures, while the energy industry continues to expands into regions which are becoming increasingly volatile.
MEETING THE ENVIRONMENTAL THREAT
Latent environmental liability in the industry is being increased at a time when money to mitigate this risk is in short supply. Specialist insurance products can address this threat in part, but the lessons of the Gulf of Mexico oil spill and the recent mining disaster in Brazil suggest that more advanced risk transfer mechanisms, featuring limits in excess of what is offered by the conventional insurance market, are increasingly needed by this industry.