By Alexander Larsen and Grant Griffiths

The Chair and deputy Chair of the IRMs Energy Special Interest Group (SIG), Alexander Larsen and Grant Griffiths review the role of risk management within the Energy Industry and discuss their observations and recommendations. The SIG has created a committee which is not just limited to oil and gas but encompasses other parts of the industry including renewables and nuclear.

Energy is vital to everything we do, it powers cars, homes and businesses. There are approximately 7 billion people in the world and astonishingly, almost 1 billion of those still don’t have access to electricity, prominently from developing nations. Therefore there is still huge amount of work to do to get electricity to everyone in these regions.

There is an ongoing transition in the energy industry taking place around the world moving from the oil and gas sectors to the use of renewables and electricity. Several challenges are facing the industry, due to the growth in population and the corresponding increase in demand.

“There is a drive towards doing the right thing for the environment, all stakeholders and investors in the industry”

Grant Griffiths, Deputy Chair of IRM Energy SIG

Risk management is at the heart of the decision making and strategy within the energy industry. The IRM SIG prepare research and publication discussing risk management in the energy industry and how well it is embedded and understood.

This year, SIG published an article with research from the Global Energy Industry discussing the disruption, uncertainty and the role of risk management. The article also looks at the effect of Covid-19 and can be read at the following link; /https://www.theirm.org/join-our-community/special-interest-groups/energy-and-renewables/

As 2020 has presented unprecedented challenges with Covid-19 there has also been challenges with OPEC and the global oil and gas prices. There are changes in global supply chain, transition in energy and diversification of energy supply.

A lot of these risks present as threats but can they can also be opportunities. Resilient and flexible organisations have been able to react to the pandemic by adapting their business models and quickly mobilising their workforce to be home based while continuing operations.

Risk Management needs to be embedded throughout the organisation to help key decision makers an ensure there is a positive risk culture. Staff need to be trained at all levels so when they see a risk they know who to report it to and how.  Ultimately risk and resilience training can decrease the threats risk presents and increase opportunities.  

“Staff are a critical component of successful risk management.”

Alexander Larsen, Chair of IRM Energy SIG

The IRM offers training to all levels of an organisation and courses are put together by risk practitioners and industry experts. Looking to the future, risk techniques such as horizon scanning and scenario testing will help an organisation be prepared for any possible event. Risk awareness and embedding risk processes will determine how successful an organisation will be in driving strategic decisions in the energy industry.

For more information on training provided by the IRM please visit https://theirm.org/training/