Accenture 2011 Global Risk Management Study: Energy Industry Report

According to energy respondents to the Accenture 2011 Global Risk Management Study, risk management is a greater priority today, than it was two years ago. It is also becoming a source of competitive advantage and high performance in the industry.

Learn more about the Accenture 2011 Global Risk Management Study.

Visit the Accenture 2011 Risk Management Study site for more information about the research.

Nine percent of the respondents in our Global Risk Management Study were executives from leading energy companies. This report augments the global, cross-industry study with some of the compelling detailed perspectives from survey participants in the energy industry.

• Sixty-one percent of respondents indicated that risk management is a high priority.

• Only little more than a half (54 percent) of energy companies say they have a true enterprise risk management program, as compared to 67 percent across the whole survey. Ninety percent of Risk Masters (companies with superior risk management capabilities and practices) have such a program.

• Only 41 percent of energy companies have a C-level executive with a chief risk officer title, compared with 64 percent across all industries.

• A large majority (75 percent) of energy companies have extended their credit risk analysis beyond the trading function to include hedging.

• Energy companies trail slightly behind the survey average when it comes to investing in risk management capabilities, but 76 percent expect to make a moderate to significant increase over the next two years.

Within the global energy industry, risk management encompasses a number of core functions including exploration and production, refining and marketing, supply and trading. Energy companies’ major focus has been on market risk, but in recent years other types of risk—including operational risk and business continuity management—have come to the fore. Energy companies are essentially built upon risk—from identifying new energy sources to hedging against market price swings.

Some key insights supported by analysis of the findings include:

• Risk management is increasing in importance.
• Energy companies lag other industries in the establishment of enterprise risk management programs.
• Low percentages of companies have a chief risk officer in place.
• Credit analysis is a key focus.
• Additional investments in risk management capabilities are planned.

Our analysis of survey responses and our experience with global energy companies point to several actions companies can undertake to enhance their risk management capabilities and create competitive advantage.

• Adopt a more comprehensive and integrated approach to risk management.

• Examine opportunities for integrating data into one single source, whether on the market risk side or on the credit risk side.

• Re-examine regulatory risk in light of global regulatory reform initiatives.

• Pursue risk management improvements as a path to competitive advantage.

Accenture has been helping energy companies achieve high performance for decades across the world. Contact us to find out how we can help your firm drive competitive advantage from your risk management capabilities and deliver long-term profitable growth and sustained future profitability.