Managers of exploration and production (E&P) projects and operations are often required to make decisions based on a variety of factors including but not limited to safety, finance, security, and company reputation. Often these factors are hard to quantify or may be in direct conflict with each other. Therefore, it is critical that decision makers utilize an approach to assessing risks associated with each factor in a consistent and defensible manner. The selected approach needs to be robust enough to sufficiently quantify the risk, but simple enough to allow for ease of use and interpretation of results. In this paper, we present several approaches by which risk criteria can be defined and then present resulting risk profiles for E&P operations in developing nations, thereby increasing the number of tools available to those faced with making such business decisions.
Introduction
Business risk may be defined as a condition involving exposure to events that would have an adverse impact on a company's objectives1. Risk in this context is understood to be determined by a combination of the likelihood of an event occurring and the magnitude of its consequences. An oil company's business risk portfolio may include events, projects, or operations with potential for impacts on the company's capital investments, physical assets, revenue, worker health and safety, public welfare, natural environment, company reputation, security, long-term legal liability, etc. From the above abbreviated list, the reader should note that a company's business risk portfolio may be influenced by a large number of variables including: whether the company operates on a local, national or global scale, the political sensitivities of local communities, precedents in the company's operating history that have "sensitized" it to certain risks, and so on. Given the large range and resulting large number of potential risk factors, it is important that each risk evaluation first assess what types of risk will be considered in the evaluation.