FOCUS 18
CHANGE TO RISK MANAGEMENT NEEDS TO BE POSITIONED AS AN OPERATIONAL MANAGEMENT SYSTEM AND EMBEDDED WITHIN THE FABRIC OF THE MANAGEMENT PROCESSES.
Common industry mistakes
Many oil and gas companies have had risk management or enterprise risk management processes for several years. However, risk management is often incorrectly positioned as a compliance function or a governance obligation, and is regarded as a mechanism solely for describing risks and communicating them to the Board. It is not seen as a strategic function, and is not part of the business planning cycle. Risk is very often left in silos and not brought together to enable a single-view of all categories of risk.
Risks and threats
Enterprise-wide risks, particularly emerging threats in new markets, are those that are on the Board agenda to understand and manage, but a bottom-up assessment is important too. While historically companies have always invested in risk management activities to address those risks that are function-specifi c, such as exploration risks, production risks and fi nancial risks, the challenge now is how to get all these initiatives integrated in a common framework to mitigate plans in order to strengthen decision-making.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Geopolitical instability
A signifi cant threat to the industry is geopolitical instability and the risks that may arise from this; not just the possibility of asset nationalisation, as recently seen in Argentina, but also predatory fi nes by a government in dire need of money. Mitigation of geopolitical risk means not only addressing the legal and contractual framework on which a transaction or operation is built, but also understanding the local political situation. Even anticipating shifts in the political landscape may not be suffi cient to control their effects, however: being aware of upcoming political risk factors is one thing, but managing these risks in time to protect your assets or people is a different matter, especially in cases where the risks are predominantly security-related, such as in Algeria in January 2013.
BACK TO CONTENTS
NEW MARKETS
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33