Risk Management Framework for the Petroleum Supply Chain

Abstract Complex plants and investments are commonplace in the Petroleum Supply Chain (PSC), known for its highly automated infrastructures and processes. Expensive equipment items like drilling rigs, offshore platforms, oil tankers, refineries, pipelines, petroleum depots and transport equipment are critical to this industry. The petroleum supply chain appears as a significant risk and high impact industry at the micro and macro economic level. Although, risk management bears prime importance for this industry, there is notorious absence of quantitative modeling. This paper introduces the relevance of a systematic approach for the identification, quantification and mitigation of risk and presents a practical framework for risk management. A PSC example is used to demonstrate its utilization and the resulting information identifies modeling data for a PSC risk management tool.