Scott Uhl, a SVP at EWI Specialty Casualty, speaks with during the 2015 IRMI Energy Risk and Insurance Conference, about the challenges facing risk managers in managing operational risk, and the way Enterprise Risk Management (ERM) “should work.”

Mr. Uhl says ERM in the post-BP (Deepwater Horizon) environment “still remains more aspirational…”  While there has been movement towards ERM, it has been very slow.  Some of the barriers to implementing ERM are the silos that risk managers operate within.  Mr. Uhl explained that risk managers have specific tasks around identifying, assessing, treating and monitoring risk within limited budgets.

“ERM requires a Board centric top- down approach”, according to Mr. Uhl. Boards have historically looked at risk in relation to ‘financial risk.’  Mr. Uhl observes “a dislocation between what (Boards) get from senior management and what the true exposures are in the field.

With BP – Deepwater Horizon , Mr. Uhl says the Board was not focused on the exposures with third party service providers (Transocean and Halliburton),  and did not understand the risk.  The operational risk manager on the Deepwater Horizon saw risks, but did not have a communication channel to the Board. BP has learned from its mistakes and has implemented a Board level safety and environmental committee  on par with all major committees, with quarterly reviews of all operational risk.  The Board is also making sure the operational risk management is properly funded so that they can monitor and implement safety and environmental.  The operational risk management team provides the eyes and ears so the board “knows what they don’t know.”

For more from the IRMI Energy Risk and Insurance Conference, visit the IRMI website, or the On Demand Library.

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