Effective risk management

Effective risk management practices provide clarity and direction for decision-makers. In DNV, we believe that enterprise risk management will distinguish those companies that provide better results with fewer unpleasant surprises.

The current attention being paid to enterprise risk management is mainly driven by shareholder and society concerns caused by scandals like Enron and WorldCom. Naturally, the focus after such events is on corporate governance, as is also reflected in new laws and regulations. On the other hand, taking risks is a necessary part of doing business. Every company has to take some risk to create value and sustain business. Those who excel in enterprise risk management – in a controlled and responsible manner – will be able to take the appropriate risks needed to enhance the returns from their business.

This autumn we have carried out a survey on enterprise risk management amongst oil and gas companies engaged on the Norwegian Continental Shelf. Interviews were conducted with top managers of 17 operators and licence holders ranging from the large Norwegian-based operators to Norwegian subsidiaries of multinational oil companies and smaller, new companies. An article about the survey is to be found in this edition of DNV Forum.

In seeking new hydrocarbon reserves, the oil and gas industry is moving into new areas which are further away from existing infrastructure, often environmentally sensitive, technologically demanding and sometimes politically challenged. At the same time, the industry is subject to considerable scrutiny from governmental entities, tockholders and other parts of society. Add to this the traditional risks of oil and gas development, ranging from geological uncertainties to the challenges of managing cost and schedule. The need for effective risk management has never been greater.

A good strategy makes clear the types of risks a company can assume to its own advantage and the magnitude of the risks it can bear. Combining business risk expertise and technical competence with genuine industry knowledge, DNV helps clients to safely and responsibly improve their business performance.

Miklos Konkoly-Thege
President and Chief Executive Officer

日付: 16 December 2005