Middle East energy firms lead the way in risk management

Energy firms in the Middle East are highly adept at responding to the ever-evolving risk landscape and have an above average approach to risk management compared to global peers.

That was the conclusion from Marsh’s Benchmarking the Middle East Onshore Energy Industry, which found that risk management in Middle Eastern firms is of a higher standard compared to more than 500 global oil, gas and petrochemical facilities .

The report cited hardware as a key strength for energy companies in the region because of land availability, substantial capital investment and the development of modern facilities.

The research also identifies key areas for improvement, including software and emergency control systems, which determine the overall risk quality of the region.

In particular, the report says significant improvement can be achieved in the management of change, namely the industrial practice of changing processes and systems without introducing new hazards or exacerbating existing hazards.

Marsh global energy practice chairman, Andrew George, said: “The relative performance of the region in its approach to hardware, in particular remote isolation and flare design, demonstrates that companies are persisting in their efforts towards creating safer installations, improving loss prevention and driving operational excellence.

“Despite facing an increasing number of challenges and a complex risk landscape, Middle East energy firms are embracing several improvement opportunities and significant risk reduction is evident, as they intensify their focus on loss prevention and operational excellence. These improvements will be reflected in future benchmarking scores.

“Improving risk quality has advantages for both clients and underwriters. High-quality risks tend to produce fewer losses and are more attractive to underwriters, generally resulting in better rates and capacity in the insurance market.”