Deloitte report: Risk intelligence issues in global energy and resources industry

Global Energy & Resource (E&R) companies are still challenged in advancing Enterprise Risk Management, from a point in time exercise to a continuous process, aligning business strategies, risks and operations.  Doing so will enable organizations to transform ERM from a “right thing to do” into a critical business process that continuously measures risk exposure and helps in the allocation of corporate resources necessary to achieve business objectives.  This is according to the Deloitte Touche Tohmatsu Limited (DTTL) Enterprise Risk Management (ERM) Global Benchmark report within the energy and resources industry.

The survey of over 100 global energy and resources companies assesses the approaches to risk management in the industry. The survey focuses on the overall maturity level of energy and resources companies, challenges around ERM and the critical issues facing the industry.

Paul Zonneveld, DTTL Global Enterprise Risk Energy and ResourceLeader comments, “The report shows that energy and resources companies are becoming more aware of the value provided by enterprise risk management, both top-down and bottom-up, as this is critical to become a Risk Intelligent Enterprise™.  Leading companies use ERM to create a line of sight between business strategies and corporate assets, helping optimize investment decisions, accelerate growth and minimize cost.  However, there is still a long way to go before this capability is ingrained across the industry.”

Key report highlights include:  

• Culture change is the top challenge while embedding ERM

Organizations were found to have risk management policies and processes in place, including risk assessment, mitigation and periodic monitoring.  However, many organizations struggle with establishing a culture of risk management, which is critical in making it effective.  

• Use of predictive and quantitative risk methods not widely used 

The majority of organizations (88 percent) currently use qualitative self-assessments to perform risk analyses. Surprisingly, predictive risk analytics and quantitative methods are not widely used, despite the vast amount of data available to organizations to enhance the effectiveness of risk management.  

• Regulation, safety and asset performance are top priorities

The top risks identified in the industry were ranked as regulatory risk (79 percent), followed by operational safety risk (72 percent) and asset performance risk (58 percent). Most companies within the industry are facing an increase in regulation and regulatory oversight, focused on the safety and operational reliability of their business. 

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