Energy Risk Management is an Area for Exceptional Expertise

Energy risk management refers to a specific area of risk management that is focused on the risks that come with dependence on energy for performance of business operations. The ideal scenario, when it comes to energy, is becoming even more difficult for companies to achieve. This is because of increased demand, political instability in oil producing areas, and the gradual diminishing of fossil fuel reserves the world over. For these reasons, companies are being forced to plan for the inevitable situation that sees a disruption in their energy supply.

However, energy risk management is not an area that can be taken quite lightly, when looking for expertise to help with handling it. This is because it is a deep domain expertise area. In layman terms, this means that the area needs to be handled by a particularly distinctive type of consultant. The expert sourced to handle this matter needs to be well versed in these matters if they are to be of any value to the company. Their expertise should be highly specific to the area of energy and should be well crafted through years of experience and specialization. Some companies make the unfortunate mistake of thinking that the emphasis on this kind of expertise is uncalled for. They, therefore, invest in generic expertise, which ends up failing at the moment that they need its brilliance to come through.

Companies need to understand that energy is an economic, social, political, and fundamental area of life. The flow of energy in terms of production is controlled by a very intricate set of factors that delve into other areas of life, and it takes unusually long time to garner enough expertise to understand the intricacies that govern this area. An understanding of the geo-political landscape has to be combined with an understanding of socio-economic factors if one is to be able to navigate the minefield that is energy.

Deep domain expertise means that the consultant is well versed in such matters. They are, therefore, able to read the situation well in time. This allows them to make the right set of recommendations to allow the company to function even where their energy supply is disrupted. A good example of such situations is the oil embargo that the US faced from the Middle East in the seventies. It brought several companies to their knees when the cost of oil sky rocketed as the supply diminished. This situation was precipitated by socio-political factors and could have been ameliorated by the right recommendations from an expert.