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Risk intelligence issues and challenges for global energy and resources industry


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4 August 2014: Energy and resources companies around the world, and including in Australia, are still challenged when it comes to advancing enterprise risk management as a continuous process that aligns business strategies, risks and operations.

Deloitte’s global Enterprise Risk Management (ERM) Benchmark Report has assessed approaches to risk management in the industry. The survey of over 100 energy and resources companies focused on the overall maturity level of energy and resources companies, challenges around ERM and critical issues facing the industry.

Key report findings include:

  • Culture change is the top challenge while embedding ERM – organisations were found to have risk management policies and processes in place, however many struggle with establishing a culture of risk management, which is critical in making it effective

  • The use of predictive and quantitative risk methods is not widely used – the majority of organisations (88 per cent) 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 – top risks identified were regulatory, operational safety, and asset performance, and most organisations are facing an increase in regulation and regulatory oversight, focused on the safety and operational reliability of their business.

Richard Jamieson, Deloitte Australia’s energy and resources risk leader Asia-Pacific said: ‘Substantial efforts have been directed toward developing enhanced approaches to risk management in the energy and resources industry, particularly in the past decade.

“ERM has become common practice, and more than half of the survey respondents reported having a fully operational ERM program.

“That means that nearly half do not, and that is a concern. The report shows that companies are becoming more aware of the value of ERM, both top-down and bottom-up, however, there is still a long way to go before this capability is ingrained across the industry, including in Australia.

“Leaders in this area use ERM to create a line of sight between business strategies and corporate assets, helping optimise investment decisions, accelerate growth and minimise cost.

“Rewarded risks are slowly getting more attention. However, recent crises across the industry have once again put asset protection and regulatory compliance high on the agenda.

“All energy and resources operators need to ensure they transform their approach to 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.” 

Those getting ERM right will share a range of characteristics, including:

  • Risk management practices that encompass the entire business, creating connections between silos that often emerge within large, mature, and/or diverse corporations

  • Risk management strategies that address the full spectrum of risks, including industry-specific, compliance, competitive, environmental, security, privacy, business continuity, strategic, reporting, and operational

  • Risk management approaches that do not solely consider single events, but also take into account risk scenarios and the interaction of multiple risks

  • Risk management practices that are infused into the corporate culture, so that strategy and decision-making evolve out of a risk-informed process, instead of having risk considerations imposed after the fact (if at all)

  • Risk management philosophy that focuses not just on risk avoidance, but also on risk-taking as a means to value creation.

Click here to access the full report.

NB: See our media releases and research at www.deloitte.com.au

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Last Updated: 

Contacts

Name:
Simon Rushton
Company:
Deloitte
Job Title:
National Manager Corporate Affairs and Communications
Phone:
Tel: +61 2 9322 5562; M: +61 450 530 748
Email
srushton@deloitte.com.au
Name:
Richard Jamieson
Company:
Deloitte
Job Title:
Partner, Risk Services
Phone:
Tel: +61 3 9691 7413
Email
rjamieson@deloitte.com.au

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