Enterprise risk management for the energy industry has been saved
Enterprise risk management for the energy industry
The Risk Intelligent Enterprise
Traditional risk management may have served well in the past, but the scope, complexity, and interdependencies of emerging risks are compelling many energy companies to adopt comprehensive and integrated approaches. See our important takeaways for any organization seeking progress on the path to risk intelligence.
The state of ERM in the energy industry
Despite a plethora of studies, surveys, reports and proposed standards issued in recent years, relatively few standard frameworks or reliable sources of enterprise risk management (ERM) leading practices have emerged for the energy industry. No single ERM framework has outlined comprehensive and concise theoretical and practical foundations, comprising basic ERM terminology (or lexicon), categorization (or taxonomy), and methodology (or approach). Leading practices are largely theoretical rather than practical, are based on anecdotal rather than empirical evidence and are fragmented across jurisdictions, industries and framework components.
Key trends and the way forward
This paper addresses:
- Key trends, issues and drivers
- The ERM capability and its evolution
- Building the Risk Intelligent energy enterprise
- A way forward
- Appendix – ERM capability maturity model
As with most of today’s critical management capabilities, sustaining the ERM capability at most energy companies will require a process of continuous improvement. Changes in prevailing conditions in the operating environment, the enterprise’s composition and objectives or the expectations of key stakeholders may require additional effort to maintain the desired stage of ERM capability maturity. Moving to more advanced stages will likely involve an iterative process based on the ERM programs steps described in this paper.