Willis Towers Watson has released a new “Natural Resources Risk Index” for the energy and extractive sector.
Operating in more technically challenging physical environments, currency and interest rate fluctuations and increased cyber-security are the top threats for chief executives of natural resources firms, the broker said.
Natural disasters and epidemics, technology that opens up the marketplace to disruptors, and vulnerability to reclamation obligations ranked fourth, fifth and six respectively.
Finishing off the top ten were: increasing complexity of regulation; a general shortage of industry-specific skills; a difficulty attracting and retaining key talent; and the uncertainties over approaching climate change and environmental policy.
The index polled 350 senior executives across the natural resources sector, including oil, gas, chemicals, power, utilities, metals and mining, asking them to rate some 50 risks by impact and how difficult each one is to manage.
Nick Dussuyer, head of natural resources at Willis Towers Watson, said: “Certainly geopolitical instability and regulatory change, coupled with digitalisation and new technologies, have created new risks for the industry to understand and mitigate. At the same time, a changing industry landscape provides opportunities for companies willing to embrace a degree of risk.
“Expanding into new, more demanding areas without overexposing businesses to risk is a top challenge for today’s executives. Unearthing new stores of natural resources has become an increasingly challenging task,” he said.
Risk perception varied regionally among natural resources firms, the broker noted.
North American natural resource leaders are preoccupied by increased cyber-security and data privacy risks, said Willis Towers Watson.
In Europe, the risk posed by operating in more technically challenging physical environments was highlighted as the principle concern in the minds of respondents.
In South America uncertainty over climate change and environmental policy was the top concern, added the broker.