There have been more incidents resulting in property damage losses exceeding $130 million after 1999 than in the preceding three decades, according to Marsh’s 23^rd edition of The 100 Largest Losses report for the hydrocarbon industry. Most of the largest losses did not result from so-called “black swan” events, but instead from the failure of prevention and mitigation measures to manage operational risks.

These figures highlight that hundreds of offshore drilling platforms and refineries worldwide are reaching—or have surpassed—their design life. Moreover, the oil and gas sector is facing a shortage of experienced operators and engineers, at a time when many companies are drilling at unprecedented depths with new technologies.

Faced with these challenges, oil and gas firms have an urgent need to address the key drivers of variability in their performance. Unfortunately, many are ill equipped to evaluate the trade-offs required to cope effectively with today’s much harsher operating environments.

A story in The Oliver Wyman Energy Journal analyzes how oil and gas firms can improve their operating performance by addressing risks that fall short of catastrophic but still have a potentially significant impact.

Note that the loss values below have been adjusted to reflect the equivalent value of the loss at the end of 2013.

Source: The Oliver Wyman Energy Journal