Effect of Risk Management in Oil and Gas Industry

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ABSTRACT
Firms that operate in the oil and gas industry experience a number of risks in the supply chain of oil and gas and petrochemical as by products. These risks are inherently inculcated into the supply chain of oil and gas and related products ranging from the exploration, production, and marketing of oil, gas and related products. Quantitative and qualitative research will be conducted into the effects of these risks has revealed a strong relationship between the concepts of risk management and other risk management strategies on the product and service quality. Organizational executives use the concept of risk management (RM) techniques to design tailored RM strategies to integrate the concept into their enterprise risk management frameworks. Typically, that characterizes BP’s risk management approaches including its reputational risk management strategy. Reputational risks in the oil and gas industry are the key driving forces behind the risks that influence the relationship between the RM concept, enterprise risk management, and product and service quality. These risk components typically characterize the exploration, production, refining, and marketing of oil and gas and petrochemical products in the supply chain. A hypothetical analysis of the effects of risk management has been formulated and analyzed on a probabilistic model to reinforce the qualitative research was conducted to crystallize the effect of risk management on product and service quality, culminating in the discussion of findings with a conclusion and recommendations on the way forward.

TABLE OF CONTENTS
I.Abstract.............................................................................................................ii II.Table of Contents.............................................................................................iii III.Introduction.......................................................................................................1 IV.Methodology.....................................................................................................3 Qualitative and qualitative research to evaluate the risk assessment at BP to measure their reputation risk............................................................................3 V.Literature Review..............................................................................................5 i.Risks associated with the oil and gas industry.......................................5 ii.Theory of risk management (RM)........................................................15 iii. The issues of product and service quality...........................................19 iv.The Link between RM and Company reputation..................................20 v.The concept of reputation risk..............................................................26 vi.British Petroleum (BP)’s Enterprise risk management (RM)................28 vii.Measuring RM at BP............................................................................30 VI.Findings and Discussion.................................................................................33 VII.Conclusion and Recommendations...........................................................36 VIII.References................................................................................................38

1.0INTRODUCTION
The oil and gas industry is susceptible to a myriad of risks which identifiably influence the operational efficiency of oil and gas firms. That is typically in relation to the product and service quality offered by the firms. Quantitative and qualitative risk management (RM) studies help to crystallize the effects of risk management (RM) on product and service quality. Risk management is a concept that equips oil and gas company executives with appropriate RM techniques to design tailored RM strategies and integrate then to their enterprise risk management frameworks. Reputational risks in the oil and gas...
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