National Oil Companies (NOCs) must embrace risk management as a value creator within their organizations, to maximize their commercial potential and overcome the challenges associated with the next era of global hydrocarbon exploration and production.

Oliver Wyman’s report, Creating Value Under Pressure: Why National Oil Companies Need Risk Management in a Shifting Environment, reveals that NOCs have been protected from the impact of inconsistent and insufficient risk strategies due to the barriers to competition they previously benefited from. The report states that NOCs face an increasingly volatile risk landscape. However, by developing an incisive understanding of the risks they face, NOCs can avoid catastrophic errors and capitalize on new opportunities to contribute to their governments’ GDPs.

Oliver Wyman’s report recommends that NOCs undertake a four-step program to create a more dynamic financial planning process, underpinned by risk management: define risk appetite; prioritize risks; aggregate risks; and link risks to strategic decision-making.

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