New risks faced by oil industry

by Richard Kilner

Story link: New risks faced by oil industry

Marsh’s chief executive officer, Dan Glaser, has warned the oil industry that they face a new series of risks that it must prepare itself for.

Glaser made the comments speaking to hundreds of senior executives in the oil industry at the National Oil Companies Conference.

Operational and legal risks were the most prominent threats businesses faced a decade ago, the CEO said, but added that although these remain important there are new challenges facing the industry.

Political risks now rank amongst the most serious, as do the dangers of pandemics, global warming, cyber crime, religious and cultural factors and nuclear proliferation.

Many of these dangers have potentially catastrophic consequences which pose particular difficulties for insurers seeking to evaluate and underwrite.

According to Glaser there is are a number of major areas that are of importance in 2008.

Firstly, oil companies need to be innovative both in terms of technology and thinking.

Skilled workers are in short supply, but are essential for many aspects of the industry to function effectively.

Leveraged projects are becoming more difficult to accomplish, as the credit markets continue to be squeezed.

Finally, the cost of vital materials such as concrete and steel are continuing to rise.