Implementing Enterprise Risk Management: Case Studies and Best Practices

CHAPTER 20 Implementing Risk Management within Middle Eastern Oil and Gas Companies

ALEXANDER LARSEN

Fellow, Institute of Risk Management (FIRM) and Honors Degree in Risk Management, Caledonian University, Glasgow, Scotland

This case study is based on real-life examples of Middle Eastern oil and gas companies where risk management has been put into place. The case study is a consolidation of the various approaches and captures the challenges of implementing risk management in the Middle East. For the purposes of this case study, the name MECO has been chosen to represent the numerous companies used to gather this data. Risk management has not yet been fully implemented in any of these companies, and they have had varying degrees of success. This case study is by no means intended to present a successful risk management implementation or best practices. Instead, it is meant to show the challenges in implementing and sustaining a successful program and the types of things that can lead to a breakdown of risk management.

COMPANY BACKGROUND

MECO is a national oil company established in 1940 when a Middle Eastern government granted a concession to a Western company in preference to a rival bid from a variety of Middle Eastern oil companies. It is among the world's most valuable companies, with an estimated value of $5 trillion to $10 trillion (U.S. dollars). MECO has some of the largest proven crude oil reserves, and is one of the largest daily oil producers across more than 100 ...