The latest market situation is leading to difficulties for some energy companies, while creating great opportunities for others. To understand how the major UK operators are dealing with these risks on an enterprise level, DNV has conducted a survey among their executives.

The survey revealed not only common issues facing the UK operators but also different approaches to managing the risks, suggesting improvement areas and opportunities for industry-wide solutions.

“We wanted to learn how operators are applying Enterprise Risk Management (ERM) in this new and changing business environment. ERM is a cross-disciplinary approach for identifying and managing the overall opportunities and threats in a company. Hence, it takes all dimensions into account, rather than a narrow risk approach,” explains Hari Vamadevan, DNV’s Director of Energy Operations in Europe.

The UK ERM Survey findings are based on interviews with senior executives at MD, CFO and COO level in many of the top 20 UKCS operators. These executives raised two issues above all others: firstly a general shortage of qualified personnel and secondly the asset integrity of the ageing UKCS infrastructure, though both are being actively addressed. The operators accept the benefits of an ERM approach, but state frustrations with the practicalities of its implementation, leading to incomplete realisation of its full ability to improve business performance.

“Despite the constant shifts in the business environment, DNV believes it is possible to enhance business performance through proper management of the business risks. Risk can be good if you can manage it,” says Robert O’Keeffe, a Principal Consultant from DNV’s UK ERM practice who led the survey.

“We hope that these observations can help the energy industry on the UKCS and elsewhere to improve its approach to managing its enterprise risks during 2009 and beyond,” he concludes.

Tags: DNV