Risks for oil business increase while risk management effectiveness decreases; study finds

National oil companies (NOCs) are failing to manage the risks of limited oil and gas resources, the recruitment and retention of a qualified workforce and energy price volatility, according to a Marsh study.
In the Marsh Oil and Gas Risk Report: 2008, more than 400 NOCs were surveyed and asked to rate the relevance of risks identified by the World Economic Forum and how effectively they felt they were managed by their firms.
The participants ranked the top five risks in order as: availability of oil and gas resources; recruitment and retention of a qualified workforce; energy price volatility; environmental impact of operations; and political/regulatory risk issues.
Marsh's NOC risk index score rose from 4.49 out of a possible six in 2007 to 4.51 in 2008, a release says.
"By contrast, the risk management effectiveness index score was 3.8."
The availability of resources as a risk issue was rated 5.3 out of a possible six (it was also the top-ranked risk in 2007 but with a rating of 4.9), a Marsh release says.
"It is no surprise that our survey has found that national oil companies are facing a riskier business environment," said Jim Pierce, Marsh's Global Energy practice leader.
"However, of more concern is the gap between the importance of the risk and how well it is managed."
This gap is increasing from year-to-year, Pierce noted.