The energy sector is undergoing rapid change. Following several years of belt tightening and cost cutting, many oil and gas companies are looking to expand into new projects and territories, and into renewable energy sources, according to a new survey by IRM into the energy sector.

Cost control and safety naturally remain key areas of focus. But the survey found that businesses plan to invest in new projects because they are confident of achieving profits despite a long period of low oil prices.

Strategic risks, the global economy and an evident skills gap are considered top risks. Only 27 per cent of respondents rated green energy as an area of concern over the next five years, raising the question whether the sector has fully digested the regulatory changes that will, for example, see electric cars as the norm in Europe after 2035.

Socrates Coudounaris, CFIRM, Chairman of the IRM and Risk Management Director, RGA International Reinsurance Company says: “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. Thiswill 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”.                                          

The sector scored only three out of five for risk maturity. Domenic Antonucci , CMIRM, describes this as “…disappointing for a sector with the history, sophistication, management talent and resources of oil and gas,” in Moving up the risk maturity curve for the oil and gas sector.

Some risk managers described as problematic a 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, you would expect from major energy companies for properly implementing risk management across large, geographically dispersed organisations.

President of Baldwin Global, Alexander Larsen, CFIRM, IRM Trainer and Chair of the Energy Special Interest Group, led the project and comments: “I am delighted that the report has had so much support from the industry itself. From the survey participation and IRM member feedback, to the expert insights of the contributors, this report has truly been an industry led effort.

Going forward, with the IRM’s support and drive, and with the setting up of the IRM’s Energy Special Interest Group (SIG), we expect that the SIG will continue to drive excellence and thought leadership through numerous initiatives such as publishing of individual expert insights and articles as well as working towards establishing a regular maturity benchmarking assessment of the industry with established and agreed benchmarking criteria.

It was a pleasure to have worked with so many expert contributors and I would like to thank them on behalf of myself and the IRM for their contributions and professionalism in meeting all the necessary dates to make this publication happen ”

Read the report here: