Oil and Gas Risk Management Market Key Product Segments and Future
Forecast by 2020
No industry is devoid of risk and the Oil and Gas industry is not an
exception either. Companies invested in the business of oil and gas
face their own unique set of risks, be it natural, manmade or
inherent in their daily operations. Risk management solutions for the
oil and gas business vary in general with the environment of
business, the stakeholders and the nature of operations. Efficient
risk management solutions not only need to be tailor made according
to the industry but also to the specific business environment being
faced. Project risk management is an integral part of any project in
the oil and gas business. Companies providing risk management
services need not only identify major risks in the business but also
communicate risk management solutions in an effective manner. Risks
when not managed diligently can have dire consequences on any Oil and
Gas Company’s balance sheet.
The oil and gas business is capital intensive in nature and operates
with a large asset base and in highly risky environments. This drives
the need for such companies to effectively manage their catastrophic
risk portfolio. These market players need to continuously strive to
optimize and strengthen their risk management models. General risk
management models comprise of two primary phases namely the initial
risk management and residual risk management. As the name suggests
initial risk management is carried out initially to identify all
risks associated comprehensively. Risks remaining after identifying
initial risks are the residual risks. The residual risks are
generally those having the potential to cause very high economic loss
to the company and must be handled with extreme care and diligence.
The types of risk management can be segmented as initial risks and
residual risks.
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Market players in the oil and gas business also face multiple
exposures to risk. These risk exposures generally include exposures
to business interruption, exposures to damage of assets, exposures to
damages caused by third parties, exposure to people harm and finally
exposures to environmental pollution. Management of all these
exposures benefits the firm in many ways through adoption of the
prevention before cure philosophy. Robust risk management not only
increases the level of control oil and gas companies exercise over
their business environment but also increases flexibility. An
effective risk allocation between parties reduces risk perception of
investors and results in cheaper financing of projects as well. Some
of the risk management services include Hazard Identification and
Evaluation, Pipeline Risk Analysis, Security Threat Management,
Facility Site Evaluation, Blast Resistant Design & Construction
Management, Quantitative Risk Analysis and Catastrophe Evacuation
Modeling among others. Risk management can be applied for both
onshore and offshore oil and gas facilities.
The global market for oil and gas risk management is poised for
growth in the future. This is driven by the increased sensitivity of
investors towards risk management and the dire consequence to the
environment in the event of major risks being realized. Catastrophes
like oil spills among others not only harm the environment but also
cost the oil and gas companies billions of dollars in punitive
damages. The major focus of these oil and gas giants is to
effectively allocate risks to parties involved and minimize chances
of occurrence which require strong risk management procedures. The
regional market segmentation for these risk management services can
be done as North America, Asia-Pacific, Middle East and Africa and
Europe. Areas where exploration activities are the most concentrated
are likely to require such services the most. Some of the major
players dealing in such services include ABS Consulting, Tullow Oil
Plc., Intertek Group Plc. and DNV GL AS. among others.
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