The rapid evolution of the global hydrocarbon industry is creating a seismic change in the risk landscape for energy businesses, according to a report published today by Marsh for its National Oil Companies (NOC) Conference in Dubai.

Marsh’s report, The Energy Industry: An Evolving Risk Landscape, cites cross-border expansion and resultant regulation, ageing infrastructures and increasingly complex supply chains among the major risks that threaten the continued prosperity of NOCs and other energy companies. By adopting a more holistic approach to risk management, Marsh argues, firms can reduce the impact of risk on their balance sheets and maximise the opportunities their continued expansion presents. 

According to Marsh, the major risks facing the global energy sector are: accessing increasingly challenging reserves; paradigm shift in the relationships between NOCs and International Oil Companies; the regulatory environment; restricted availability of capital; asset ageing and decommissioning; skills shortages; geo-political tensions; and lengthier supply chains.

Launching the report, Eddie McLaughlin, a Managing Director in Marsh Risk Consulting, said: “As NOCs grow, financial, geopolitical and technological risks become increasingly pervasive and inter-connected. NOCs must arm themselves with the ability to anticipate risk and then mount superb responses in the face of the unpredictable. It is this very excellence that helps mark such companies out as ‘elite’ organisations.”

Jim Pierce, Chairman of Marsh’s Global Energy Practice, commented: “NOCs have prospered following a prolonged period of growth, but this same growth has created a new era of risk. Increasingly complex in their nature, the risks associated with cross-border expansion, increased regulation, ageing infrastructures and longer supply chains have the potential to stop future expansion plans in their tracks.

“NOCs must adopt a more robust approach to risk management and seize the opportunity to learn from both the mistakes and best practices of their peers.”

Marsh’s annual NOC conference takes place under the patronage of His Highness Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Ruler of Dubai. Access more information about the conference and view special reports.