The energy sector is unique in that the nature of the business and products produced (in some cases) can have detrimental effects on the health and safety of workers as well as on the environment. This reality, paired with the jump in high profile incidents, has placed a spotlight on the industry as a whole.
While managers across all industries are grappling with visibility into, and control over, a multitude of internal and external risks, those in the energy industry have additional intricacies to combat. These intricacies require organizations to be flexible, well organized, and agile enough to quickly react to unforeseen events, as well as shifts in the market.
On top of the pressures mentioned above, stringent compliance and regulatory requirements also add concerns around safety, asset reliability, and auditing/reporting. Improving operational efficiency while cutting costs can also put strain on executives, impacting the organization both operationally as well as strategically.
The overwhelming top pressure, cited by 57% of our energy respondents, was the impact that operational risks can have on the business. And because of the asset-intensive nature of the energy sector, it is no surprise to see that a critical asset failing is the top risk identified. If an asset fails, it will not only result in unscheduled downtime and lost production, but could also lead to non-compliance, EH&S issues, financial concerns, and tarnished brand image.
To cope with this matrix of risk, companies in this sector are looking to implement an integrated, flexible risk management framework.
One of the hallmarks for leaders in this area is being proactive in their risk management when attempting to mitigate adverse events. Executive sponsorship programs, a risk-aware culture, and an incorporation of the necessary tools to make that happen, are all essential building blocks to a strong risk management strategy. The energy leaders practicing these techniques, according to Aberdeen’s survey respondents, saw a 9% decrease in the number of compliance citations, compared to a 1% increase for the Followers. Those positive results are due in part to a common system for approaching risk management, which is then integrated into every decision.
An important thing to keep in mind when calculating risk is that changes will inevitably occur on an operating site, whether intentional or unintentional, those risks need to be considered for any change within the organization, while staying in compliance. In adapting for change, organizations must apply risk management techniques to their asset management and holistically ingrain risk visibility.
Risk is no longer just a part of doing business; operational risk management must now be integral in a company. Successful companies are moving away from measuring and managing risks one at a time and evaluating their risk landscape from top to bottom. Looking for more on powering the energy of the future by mitigating risk? Look no further.