Oil and gas executives long have been well-acquainted with the obvious risks facing their companies. Spills, environmental damage, fires and employee accidents all can have severe consequences on a company's operations, reputation and bottom line, and executives rely on well-established policies and procedures to prevent or to mitigate the damage in the event of these mishaps. Such events, as well as failing to access new economically recoverable reserves or underestimating the effects of political instability on international operations, are simply risks faced in the normal course of business. But in today's post-Enron business environment, an informal approach focused solely on traditional oil and gas industry risk may be insufficient. Shareholders and regulators are demanding that companies take a closer look at their risks across all activities and operations, and clearly understand how those risks are to be addressed. For example, the New York Stock Exchange now requires that audit committees of all of its listed companies identify how management recognizes and manages key risks to the organization. This heightened awareness of risk is presenting new challenges to oil and gas executives, who in the past have tended not to focus the same attention on non-traditional risks. These non-traditional risks, however, can also have serious consequences if not dealt with appropriately. For more on this, see the December issue of Oil and Gas Investor. For a subscription, call 713-260-6441.

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