Business | Oil & Gas
National oil companies lack security knowledge
The awareness of growing risk to energy security and its implications is relatively low among national oil companies (NOCs) that control more than 90 per cent of the world's oil reserves, according to a study released yesterday by Marsh, a global risk and insurance services firm.
- Staff Report
- Published: 00:00 April 26, 2007
Dubai: The awareness of growing risk to energy security and its implications is relatively low among national oil companies (NOCs) that control more than 90 per cent of the world's oil reserves, according to a study released yesterday by Marsh, a global risk and insurance services firm.
Speaking to Gulf News from New York, Brian Storms, Chairman and CEO of Marsh said: "NOCs control the majority of the world's carbon resources. In the oil and gas sector, 14 of the world's top 20 upstream oil and gas companies are NOCs. Cleary, some of the risks that these companies face are risks that energy consumers ultimately face as well. Thus it is very important that these companies understood the implications of various risks they face."
According to the Marsh report,"The Impact of Risk on National Oil Companies," less than 10 per cent of NOC leaders surveyed by Marsh Inc. said they have a full understanding of the risks they face - and how to effectively manage them.
The report examines risks and operational challenges among state-owned oil enterprises. Marsh gathered much of the data from a recent global risk advisory meeting held in Dubai and attended by approximately 250 leaders from NOCs, government and academia.
Potential risks faced by national oil companies now cover a wider spectrum that includes events such as terrorist acts, a major natural disaster or even an epidemic outbreak that affects the supply chain as well as a variety of operational risks, reputation risks, strategic risks and financial risks.
Spectrum of risk
"The spectrum of risk that business leaders face today is far more complex than ever before. Newer risks - such as the impact of climate change - are moving near the top of the list," said Storms.
Traditionally companies have been reliant on insurance companies to protect their assets in the case of disasters. But a growing number of risks are uninsurable and in this context companies need to look at innovative ways to transfer and finance risks. "As the risk environment changes, it is no longer enough to just have the right insurance policies. To gain a competitive advantage, companies need to strategically mitigate their risk by leveraging in-depth knowledge of a company's risks as well as industry expertise," he said.
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