Risk management in MECO was a lengthy, drawn-out process for a number of reasons. The key reasons for the long process were a lack of a clearly defined scope, lack of authority, staffing limitations, slow corporate culture, and resistance to change. Risk management, had it been approached correctly, could have been successful much earlier. This is reflected in the IT and Project Management examples whereby success was dependent on staffing and buy-in from the top. Management needs to understand the benefits and be seen to support the process.
Within an organization such as MECO, support from the top is vital. Having a framework in place that was bought into by the CEO would have likely increased the chances of success. Additionally, the poor placement of the risk management team was another hindrance. This is all too often the case with risk management not being established as a department from the outset. Few risk professionals will be happy joining a newly formed risk management team or department that doesn't sit within a relevant and powerful division or have independent reporting lines.
Within MECO, the organization was asked to identify risk without having undertaken training, without a consistent framework or procedure to follow. Also the survey was not scientific in its approach.
Despite the positive move to the Corporate Planning division, the risk management team lost a staff member, who it took a year to replace. This has meant that many of the objectives set out for the team were not met and the organization had started losing faith in the department, setting it back yet again. This makes it a challenge for the newly established team of 15 to regain buy-in from lower levels of the organization despite finally getting support from top levels.
ABOUT THE CONTRIBUTOR
Alexander Larsen, Fellow, Institute of Risk Management (FIRM), holds a degree in risk management from Glasgow Caledonian University and has more than 10 years of experience within risk management across a wide range of sectors, including oil and gas, construction, utilities, finance, and the public sector. He has considerable expertise in training and working with organizations to develop, enhance, and embed their enterprise risk management (ERM), business continuity management (BCM), and partnership management processes.
Alexander spent the first half of his career in the United Kingdom working in senior risk consultancy roles with Marsh and Zurich before leaving to join Det Norske Veritas (DNV) in Malaysia and the United Arab Emirates with responsibility of developing their risk management services for the energy sector in the Middle East and Asia.
Since leaving DNV he has worked in the Middle East in a variety of roles. Prior to joining Lukoil, where he is currently Risk Manager for the West Qurna 2 Asset in Iraq, Alexander worked with a number of oil and gas companies, developing and implementing ERM frameworks and business continuity management within the Qatar Foundation.