High risk and volatility require new risk management approaches

As risk ramps up for the global energy industry, Energy Risk’s US Leaders’ Network convened in Houston in October. It discussed the best risk management approaches for tackling today’s short- and long-term challenges, especially those springing from geopolitical upheaval, policy uncertainty, and supply and demand. From managing and modelling current volatility to more strategic issues around infrastructure build and portfolio concentration, senior risk decision-makers discussed their concerns, examined their options and swapped experiences and best practices. The use of artificial intelligence and the importance of building a proactive risk culture within an energy organisation were key themes that ran throughout the discussion. 

Key takeaways

• Risk is increasing for energy firms, change is fast-paced and new risk management approaches are required.
• Major causes of risk include geopolitical shifts and policy uncertainty, supply and demand variables, as well as inadequate infrastructure investment.
• Lack of infrastructure investment in gas and power markets, coupled with surging demand from data centres, will lead to high market volatility over the next few years.
• As firms consider which regions and fuels to concentrate on or pivot to in the future, risk management could become more involved in longer-term company strategy.
• The use of AI could free risk teams from lengthy tasks, giving more time to think further ahead.
• Creating a productive, enterprise-wide risk culture is essential.

Download High risk and volatility require new risk management approaches