Energy firms must take a holistic view of operations to ascertain risk management decisions better.
FREMONT, CA: The increasing complexity of business processes and the significant risk events have increased the operational risk management activity in the energy industry. This has led to many reflections, regulations, and recommendations to enhance the process. Operational risks affect productive assets that are vulnerable to failure and thus generating an economic loss, personal injury, or environmental damage with a significant impact on brand reputation. Read on to know more about how energy firms are using risk measurement methodologies to weed off operational risks.
Recently, the energy industry has seen a rise in the number and magnitude of events that have given rise to claims. A single operational risk can even have a tremendous economic and environmental impact. Against this backdrop, energy companies require to allocate resources to improve their operational risk management systems. More rigorous and frequent inspection of critical assets with the aid of technologies can enhance the prevention and mitigation of accidents and can minimize damage in the event of an occurrence.
Transferring risk through insurance is another widely used operational risk management tool. Risk analysis and data processing methodology is used to measure the intensity of the hazard. One of the goals achieved with the use of this technology is reduced operational risk costs for the energy company. Access to huge number of data sources from the internet, along with advanced analytics, is also helping energy companies make better decisions related to risk management. The IoT, which embeds electronics, software, sensors, and network connectivity within various energy generations and transmission equipment and infrastructure, can improve operational efficiency while lowering costs and risks.
Energy companies usually spend considerable resources assessing their vulnerability to operational failures but are reluctant to share their knowledge. Few companies willingly share their operational risk mitigation plans to help others. This means that greater sharing of information with peers could help them manage risks efficiently. All this suggests that better operational risk management can help energy companies thrive.
See also: Top Energy Technology Startups