20200328-德勤-Risk_powers_performance__Navigating_the_major_risk_trends_in_Energy,_Resources___Industrials_for_competitive_advantage_24页_11mb

Risk Powers Performance Summary

Core Content

This document explores the evolving landscape of risk management for Energy, Resources & Industrials (ER&I) companies, emphasizing that risk is not just a threat to be mitigated, but a lever for creating competitive advantage. It outlines 10 key risk trends and identifies four global drivers of transformation: Regulatory Scrutiny, Digital Transformation, Safety and Reliability, and Sustainability. Each trend is accompanied by associated risks, challenges, and best practices for effective risk management.

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Main Risk Trends

1. Industrial Controls: Too Much at Stake to Ignore

   • Operational Technology (OT) is increasingly automated, exposing the enterprise to new cyber risks.
   • Risks include cyber-attacks on critical infrastructure, potential financial and reputational damage, and operational disruption.
   • Best practice: Adopt a multidisciplinary approach, integrating IT and engineering teams, and implement real-time monitoring and clear governance.

2. Getting a Grip on the Extended Enterprise

   • ER&I companies rely heavily on suppliers and subcontractors, creating a complex supply chain.
   • Risks include lack of oversight, cost leakage, project delays, cybersecurity breaches, and reputational damage.
   • Best practice: Implement a proactive, 360-degree view of suppliers with real-time monitoring and ethical supply chain management.

3. Cyber Everywhere!

   • Rapid digital transformation increases connectivity and cyber exposure.
   • Challenges include under-regulation, talent shortages, ICS vulnerabilities, and the merging of cyber and physical risks.
   • Best practice: Redefine cyber risk as an enabler, not a threat; ensure full visibility into the cyber footprint and continuous monitoring.

4. Third-Party Risk Management: A Source of Strategic Advantage

   • Third-party relationships are vast and complex, impacting security, reputation, and performance.
   • Risks include mismanagement of contracts, cybersecurity vulnerabilities, and ethical and regulatory non-compliance.
   • Best practice: Integrate third-party risk management under a single ownership structure, with clear policies, training, and ethical oversight.

5. A Revitalized View of Risk Through Integrated Assurance

   • Assurance programs are critical but often uncoordinated, leading to inefficiencies.
   • Integrated assurance focuses on value drivers like safety, operational integrity, and financial resiliency.
   • Best practice: Establish a single, senior role for assurance, ensuring coordination, reduced business burden, and better reporting.

6. Product Security: It Starts with the Manufacturer

   • Connected consumer products introduce new cyber risks and potential points of entry for threat actors.
   • Manufacturers must implement "security by design" to protect against current and future threats.
   • Best practice: Design security features into products, monitor post-sale, and ensure alignment with organizational goals.

7. Turning Digital Risk into Digital Advantage

   • Digital transformation brings both opportunities and risks, such as AI bias, privacy concerns, and regulatory compliance.
   • Risks can emerge rapidly and are often unpredictable.
   • Best practice: Develop a robust digital risk governance framework, including scenario analysis, risk identification, and continuous monitoring.

8. Treasury and Cash Management in a Complex Global Organization

   • Multinational operations introduce foreign exchange, interest rate, and commodity price risks.
   • Challenges include inadequate banking infrastructure and regulatory restrictions in developing countries.
   • Best practice: Leverage cloud-based systems and cash concentration strategies for better visibility, control, and governance.

9. Sustainability: Creating Value Through Lowering Carbon Emissions

   • Sustainability is a major risk driver, affecting operations, supply chains, and stakeholder relations.
   • Stakeholders now demand detailed sustainability plans and climate risk management.
   • Best practice: Align sustainability with corporate strategy, assess climate-related risks, and demonstrate transparency and action.

10. Energy Trading: Optimizing the Hydrocarbon Value Chain

    • Energy trading involves managing supply chain and market risks, including price volatility and geopolitical factors.
    • Best practice: Focus on optimizing the value chain through strategic partnerships and data-driven decision-making.

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Four Catalysts for Transformation

1. Regulatory Scrutiny

   • ER&I companies face heightened regulatory expectations due to the environmental and social impact of their operations.
   • Companies must ensure their regulatory risk approach aligns with value preservation and performance enhancement.

2. Digital Transformation

   • Digital technologies are driving efficiency and innovation but also increasing cyber exposure.
   • Effective digital risk management is essential to capitalize on opportunities while avoiding pitfalls.

3. Safety and Reliability

   • As operational complexity grows, safety outcomes become more critical.
   • Companies must prioritize safety and reliability, especially with the involvement of third-party suppliers.

4. Sustainability

   • Consumers, investors, and regulators are pushing for more sustainable practices.
   • Sustainability is now a key driver of value creation and long-term resilience.

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Key Takeaways

• Risk is a performance lever: Effective risk management can uncover opportunities for competitive advantage.
• Integrated approach is essential: Across all areas—cybersecurity, supply chain, product security, and treasury—companies need a unified and coordinated risk strategy.
• Digitalization brings both risk and reward: While enabling innovation, it also introduces new challenges that require advanced governance and oversight.
• Sustainability is no longer optional: Companies must align with global sustainability goals and demonstrate accountability to stakeholders.
• Third-party risk is a strategic issue: Managing these risks holistically can protect reputation, security, and financial performance.