Oil and gas: understanding, managing and valuing risks

Understanding, managing and valuing the risks associated with uncertainty and natural variation are core skills for the actuarial profession. We have in house Insurance and Financial Risk teams, who work with our Oil and Gas team and industry experts at all stages of the asset life-cycle.

Risk transfer products are priced to reflect both estimated risk (calculated according to some model) and model risk (how accurate and appropriate is the risk model itself). As a rule, you always pay for uncertainty; reducing model risk will go towards ensuring that you get the best possible quotes, based on the true underlying risk.

We can provide an independent perspective to the valuation, transfer and mitigation of all types of risk:

Understanding uncertainty

Gain a better understanding of the significance of uncertainty, sources of bias or over-confidence, and the impact these have on production forecasting and asset valuation.

Risk valuation

Understand and value risks which are not transferrable except by explicit sharing or joint venture, but which affect your corporate and asset-level risk profile.

Mitigation support

Support mitigation of risks transferrable through traditional and evolving insurance, simple hedging or Structured Product arrangements. An actuarial opinion on your project, portfolio or global risk profile can help maximise insurability, and the cost at which risk transfer can be achieved. We can answer such questions as 'What is the value of risk transfer to you?', 'How does this compare with the market cost of a specific contract?' and 'How much insurance or hedging is optimum?'.

Factor assessment

At aggregate level, we can value risks taking account of factors which only exist in an aggregate level, such as concentration risk and the benefits of diversification.