Why Oil and Gas Risk Management is Important

image of business owner dealing with risk managementOil and gas industry operators deal with an expensive and dangerous commodity. As a result, they’ve got to do what they can to keep accident risks low. Proper risk management, therefore, must play into standard operating procedure. Why is this important? What are some of the things you can do in your business to make it safer?

At the end of the day, the oil industry remains tightly regulated. Therefore, you’ll need to meet all minimum standards to keep operating within safe means. Engage in risk prevention and carry insurance to make the most of your protection.

Risk Management Equals Less Money Lost

If an accident like a fire or spill, impacts your business, damage costs might skyrocket. Injuries, lawsuits, workers’ comp claims, regulatory fines and property damage could add up. As a result, the smart business is one that prevents such accidents in the first place.

While you can’t prevent every business accident, you can keep standard mishap risks low. So, there’s a smaller chance of something coming along for which you cannot prepare. As a result, your likelihood of having to file a claim on your commercial insurance will likely drop. Your insurer might view this as a sign that you are less of a risk to insure, and this could lead to rate savings in the end. Risk management does not eliminate the need for insurance coverage. However, it can make it more cost effective.

Furthermore, you also decrease the likelihood of encountering problems not covered by insurance. As such scenarios won’t qualify for financial help, you might have to pay for them out-of-pocket. That’s a substantial loss which most executives don’t want to face. Thus, controlling risks can save even more money than just reducing insurance costs.

Preventing Commercial Risks

It’s virtually impossible to know every personal or property risk in your business. However, you should have at least a baseline grasp of where to take steps to make your business more secure. Target areas of concern first and foremost when making safety improvements.

For those who need guidance in risk management, various avenues exist. First, strict industry standards govern the oil and gas industry. Businesses must follow all guidelines, and not take liberties regarding safety or performance.

Furthermore, insurance companies, industry leaders and local entities can often provide risk management counseling for those that want to put in place further security. Use these resources to review safety procedures and implement strategies to keep your operations secure.