Energy, resources firms immature in use of risk management tech

Many companies in the energy and resources sector are not mature when it comes to using enterprise risk management (ERM) technology, a new survey has revealed.

Deloitte’s Enterprise Risk Management (ERM) Benchmark Survey examined 100 energy and resources companies worldwide, with the majority of them in Europe and Asia. Eleven per cent were in the Oceania region.

The survey found more than half of companies (56 per cent) are not using software tools to support ERM processes. Three-quarters of the companies using these tools said ERM integration with other IT systems happens on an ad-hoc basis, with 50 per cent saying they have taken a silo-driven approach to ERM tools.

A further 21 per cent of these companies use tools to integrate risk management with other functions such as internal audit, compliance, process management, and performance management.

“The integration of the ERM tool with other management systems remains a major weakness in overall ERM performance,” read the report of the survey.

“Functionality to allow users to perform a full range of ERM analyses, such as modelling detailed scenarios, calculating aggregate risk measures, facilitating capital investment and allocation, and generating risk management reports, remains elusive.”

The survey also found only 28 per cent of companies use predictive risk analytics for ERM, with 88 per cent most relying on qualitative self-assessments to perform risk analyses.

“Big data is an area companies need to investigate further to better assess root causes and prevent risks from occurring,” read the report.

Other analysis techniques companies used were scenario analysis, economic metrics, probabilistic analysis, key risk indicators, industry benchmarks, stress tests, third-party assessments, and failure mode and effects analysis.

About two-thirds of companies use quantitative risk analysis methods, with 15 per cent finding the implementation of tools to support this a challenge. Also, 15 per cent found data capturing a challenge, with 9 per cent finding it difficult to justify the time and cost associated with this.