Effective risk management to boost capacity in the Middle East
The “above average” approach to risk management from the Middle East’s energy sector may result in better rates and capacity in the insurance market, according to research by Marsh.
Relative to their global peer group, Marsh’s Risk Management Research, Benchmarking the Middle East Onshore Energy Industry, which gauges the comparative risk quality of Middle Eastern oil, gas, and petrochemical facilities to more than 500 similar facilities worldwide, found the region’s energy sector to be adept at responding to the ever-evolving risk landscape that they face.
“Improving risk quality has advantages for both clients and underwriters. High-quality risks tend to produce fewer losses and are more attractive to underwriters, generally resulting in better rates and capacity in the insurance market,” said Andrew George, chairman of Marsh’s Global Energy Practice.
George said that the Middle East is playing an increasingly critical role in world energy production and that significant investment in the region and expanding facilities necessitate that the industry “fully understands and addresses the unique landscape of risks involved”.
“The relative performance of the region in its approach to hardware, in particular remote isolation and flare design, demonstrates that companies are persisting in their efforts towards creating safer installations, improving loss prevention and driving operational excellence,” he said.
Marsh’s research identifies key areas for improvement, including software and emergency control systems, which determine the overall risk quality of the region. In particular, it found that improvement could be gained in management of change (MoC), the industrial practice of changing processes and systems without introducing new hazards or exacerbating existing hazards.
George continued: “Despite facing an increasing number of challenges and a complex risk landscape, Middle East energy firms are embracing several improvement opportunities and significant risk reduction is evident, as they intensify their focus on loss prevention and operational excellence.
