A study on Enterprise Risk Management (ERM)practices in oil and gas industry / Alia Abdullah Saleh,Al-Hafzan Abdullah Halim and Anas Zafirol Abdullah Halim (original) (raw)
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economies, 2018
This study empirically investigated the ERM Implementation model and proposed framework to identify and manage risks in Oil and Gas Sector in Malaysia. The study examined the role of ERM framework implementation in improving business performance by utilizing Economic Value Added as a measurement tool. The study also provides insights to the Oil and Gas Sector to gain higher profit returns, reduce cost of capital, and improve shareholders value. Moreover, it contributes significantly in the field of Enterprise risk management in Malaysia. The identification and management of risk is significant to organizations in managing risks efficiently. Expectations of stakeholders of the organization are high from executives and board of directors in managing the risk effectively. Linear regression analysis is utilized in analyzing the data obtained from the data collection performed for this paper. Purposive sampling has been employed in order to select the firms that are operating in Malaysian oil and gas sector. Primary data has been utilized to collect data with the help of structured questions and interview techniques that involve semi structured questions. The results of the regression analysis conducted for in this study suggested that a significant and positive relationship between Enterprise Risk Management with operational risk; market risk; political risk; health, safety and environmental risk; and, also business performance.
2022
The oil and gas business climate is characterised by unpredictably occurring events like price fluctuations, growing production costs, new laws and increasing demands from many stakeholders. Accordingly, it has become critical for businesses to re-strategize their operations toward excellence in order to meet the needs of their stakeholders and environmental pressures at all times (Tasmin et.al, 2020). Oil and gas companies are exposed to various risks; oil and gas sector specific risks and business specific risks. It is recognised that the effective and efficient management of business risks is imperative to continued growth and success. An Enterprise Risk Management (ERM) framework consists of policies, procedures and an organisational structure with clear roles and responsibilities aimed at risk identification, assessment, management, monitoring, and reporting (Risk Stakeholders – Skillmaker, 2013). This thesis is focused on reviewing of the efficacy of enterprise risk management practices in offshore operations of Middle Eastern companies in the oil and gas industry with the aim of critically reviewing the literature related to enterprise risk management, examining enterprise risk management practices in offshore operations, evaluating the effectiveness of the implementation of enterprise risk management practices and finally, recommending how companies in the Middle East can improve and maintain their existing ERM framework and practices. This study adopts the Systematic Review method in order to determine the efficacy of enterprise risk management practices in offshore operations of Middle Eastern companies in the oil and gas industry using secondary data. Data was collected solely from secondary data sources and information was gathered from published peer-reviewed journals, reports, and credible published contemporary study sources during the period 2012 to 2022, to maintain authentic and relevant research findings, conclusions and recommendations. The data collected provided information on the efficacy of enterprise risk management practices in offshore operations of Middle Eastern companies in the oil and gas industry and was analysed thematically. The study found that only 44% of 240 Middle Eastern companies have established a formal ERM approach using either the ISO 31000 standard or the COSO standard and in some cases, a combination of both and that companies are still not implementing the practices at a more considerable pace. Additionally, there is a positive effect resulting in maximised profitability, productivity and efficiency in both financial and non-financial areas of the companies, which lead to a ripple effect of an increased and improved competitive advantage. It was further highlighted that in order for companies in the Middle East to improve and maintain their existing ERM frameworks and practices, as well as increase its efficacy, the company’s risk appetite should be analysed holistically and a risk culture that can be implemented throughout all the departments in the company consistently and effectively should be developed. A Chief Risk Officer (CRO) should also be appointed and the company’s ERM effectiveness results should be published in order to positively impact the company in additional ways.
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2016
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The international journal of business ethics and governance, 2021
Oil and gas projects are at high risk and the reasons can be the adoption of complex technology, participation of different parties, etc. Oil and gas industries are often vulnerable to risks and hazards, but they overcome these problems by following tools and techniques of risk management, which results in employee and organizations safety. Based on the facts, this research report aims to evaluate and identify the risk management strategies and procedures and assess the efficiency of risk management tools in the Oil and Gas Company in the Kingdom of Bahrain. The survey was conducted among two groups using quantitative as well as qualitative methods. One hundred twenty-four participants comprising of Engineers, Superintendents, Fire and Safety Officers, HR Managers, Health and Safety Environment Officers were among the respondents of the Survey Questionnaire. For the semi-structured interview, managers from supply and marine, Operation Specialist, Acting Manager of Health, Safety and Environment (HSE), Managers of Operational Plant Department were selected. The data collected through the survey question was analyzed using statistical analysis. The data collected through the survey questions were later imported to IBM SPSS (Statistical Package for Social Science) version 23.0 and performed descriptive analysis to explain the participants' characteristics, discrete variables expressed as frequencies and percentages and continuous variables expressed as mean and SD. The reliability of the instrument was assessed using Cronbach's alpha. This research indicated that around 56 % of the engineers and majority of the participating managers agree and strongly agree that the company has the Oil and Gas Company in the Kingdom of Bahrain have has implemented several safety precautions, training, and appropriate risk management tools to ensure the safety of the employees and work to eliminate any risk which could be hazardous to life and property.
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Jurnal Teknologi, 2015
Risk management is one of the most essential and significant part of construction projects due to assuring the attainment of project goals. Because of increasing global energy, more attention is needed to be paid towards risk management in oil and gas companies. The aim of this study is to improve the implementation of risk management within contractor companies in the oil and gas construction project through the evaluation of the most import risk groups and the barriers of implementing risk management in this part of industry. The current study is carried out in Iran and the scope of study includes only the construction project in oil and gas companies. A total of 48 questionnaires were distributed to the respondents and only 35 were obtained duly answered. The data was analyzed using SPSS software during the preliminary stage of this study, a variety of risk groups have been studied, six of it were identified to be the most probable in oil and gas construction projects which inc...
International Journal of Business and Management
This paper intends to vindicate the influence of Enterprise Risk Management (ERM) implementation on firm performance. A sample of 11 oil and gas Public Listed Companies (PLC’s) were selected in this study. Data were collected using content analysis with regard to the companies’ ERM practices and their financial performances. ERM implementation was measured using COSO’s ERM integrated framework while the firm financial performance was assessed through return on assets (ROA) measurement. Multiple regression analysis was performed to test eight developed hypotheses. Results indicate that four components of the ERM framework, i.e. supportive internal environment, objective setting, control and monitoring activities, are found to be positive and significant predictors for the firm’s performance. The findings support the efficacy and potential strengths of ERM implementation in the oil and gas companies.
Enterprise Risk Management: A Review of Two Decades
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This paper is a modest review spanning a 20-year period on Enterprise Risk Management. Enterprise Risk Management (ERM) deals with risks and opportunities which have an impact on value creation. Unlike traditional risk management (TRM) which is silobased, ERM is a holistic approach to risk management. Past studies have produced many contradicting results on the impact of ERM implementation on firm performance and also on the factors which are crucial for the successful implementation of ERM. As such, it is of absolute necessity to identify the determinants of ERM implementation and also how ERM improves performance. The research methodology for this paper began with a literature search for ERM-related articles from journals of various rankings from 2000 to 2020. Relevant papers for the review were selected by using the `going backward’ and `going forward’ process. Fifty research papers were selected in this manner for this review. Prior studies have used different variables to show ...