Report: Cyber security becoming top concern for energy industry

Cyberattacks  and other IT security issues have become a top industry concern for the first time in the history of Ernst & Young’s recurring survey of energy executives, ranking No. 9 on the list of most important industry concerns of 2013.

IT security, particularly the threat to companies’ operations and energy infrastructure, was a new entrant this year in the list of Top 10 risks to the oil and gas industry. The No. 1 concern remained “the risk of a health, safety or environmental incident,” as it was in the last survey.

“The oil and gas industry is undergoing an intense focus on safety and environmental risk preparedness and mitigation,” Dale Nijoka, Ernst & Young’s global oil & gas leader. “In light of corporate social responsibilities, economic challenges and regulatory pressures, it has become increasingly clear that managing these risks is vital for long-term sustainability.”

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The results come from a sample survey of more than 100 industry executives from 90 companies in 21 countries, according to Ernst & Young. The advisory firm released the report, Business Pulse: oil and gas, this week. (You can read the complete report below.) Previous survey results were released in 2011, 2010, 2009 and 2008, according to the firm.

Also ranked among the oil and gas industry’s top risks: price volatility, access to reserves and markets, cost escalation, and uncertain energy policy.

The industry’s ability to meet project budgets and timing goals has come under more scrutiny, as the size of projects has rapidly grown, according to Ernst &Young. Increasing project scale and complexity was ranked the No. 10 concern for 2013.

“Poorly managing these issues reduces the ability to positively affect project performance and value,” said John Avaldsnes, Ernst & Young’s global oil & gas advisory leader. “Having a clear definition of what constitutes ‘acceptable risk’ for a project diminishes the risk that remains. Aligning operations through performance management is crucial.”

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The report also ranked what executives view as the industry’s leading opportunities. Increasing demand from emerging economies like China surged to the top of the list this year, moving up three places since the 2011 report.

Other top opportunities include: investing in research and development, frontier acreage, focused recruitment and retention programs and new infrastructure to access resoruces and markets.

EY Risk and Opps Business Pulse Oil and Gas 2013