Forward from IRM

Foreword from IRM

We are delighted to continue our working partnership with the Cambridge Centre for Risk Studies which has produced this valuable guidance for the energy sector.

Firms throughout the energy value chain need innovative tools, like the scenario analysis techniques outlined in this report, in order to understand and manage risk and opportunity in a volatile world. As the paper says, the extreme risks that the sector faces may not be predictable in the conventional way, but they are foreseeable. The thinking in this guidance will help organisations sharpen up their foresight and improve their resilience in respect of future events.

The report outlines three plausible scenarios that should be considered by any organisation operating in the energy sector: a Middle East conflict, a Gulf of Mexico hurricane and the emergence of legal liability relating to climate change. Whether these scenarios themselves unfold as described is only part of the story: the process of marshalling the right people in an organisation to have a meaningful discussion around the scenarios and considering their implications and alternatives will be of great value in itself. IRM has an active special interest group of practitioners working in the energy sector. We will encourage the members of that group now to take the Cambridge work and ‘road test’ it, working as a community to further develop new thinking in this area.

I would like to thank all the organisations and individuals who contributed to this work and also the Cambridge team for their focused and thorough approach, bringing some new thinking on concepts and techniques into the risk management space.

Socrates Coudounaris,

BEng (Hons) MSc FCII CIP CFIRM IRM Chair Risk Management Director, Reinsurance Group of America