ESSENTIAL ELEMENTS OF A FORMAL RISK MANAGEMENT PROGRAM

Traditionally, managing risks that threaten life, assets, and the continued competitiveness of an organization in the petroleum industry has often been practised by several functions within the organization (eg, production, engineering, safety, security, and accounts). Actions have been taken to combat some forms of risk to the organization, although this has tended to be on an ad hoc, piecemeal basis. The best means of integrating these activities is through the development of a company-side formal risk management program. The eight main elements which comprise such a program are: (1) corporate risk management policy (2) communication of risk management program (3) identification and evaluation of major risk exposures (4) integrated decision-making process (5) risk-financing strategies (6) cost-effective insurance program (7) contingency plans and (8) annual risk management report. The purpose of each of these activities is described, giving examples that prove their successful application in the safety engineering and management regime.