Top 6 trends for oil and gas industry in 2014
Today’s oil and gas industry executives – including control room operators monitoring use data, chief information security officers analyzing the potential cyber security risks of a new IT system, and oil rig managers discussing drilling sites with geologists – are making business decisions in an interconnected landscape of risks and rewards. Success demands balancing the dizzying array of new regulations, cutting edge technology, and emerging threats and opportunities that are ever present in this industry.
According to management consulting firm Booz Allen Hamilton, these are the six key trends that are poised to greatly impact the oil and gas sector and what every oil and gas executive needs to know.
Top six energy industry trends for 2014:
1. The technology supply chain will increase the need for cyber risk management.
Oil and gas companies recognize that embracing networked infrastructures allows them to more efficiently operate their business, and in doing so, they increasingly rely upon vendor materials, products and services.
However, the industry is only now coming to terms with the cyber risk management challenges created by a more open network and increased reliance on the technology supply chain. Oil and gas leaders must address the weighty task of assessing the security of third-party vendors and protecting critical business assets from those who should not have access or who wish to disrupt the business.
2. Cyber risk management will become more customized.
Every oil and gas company stands to be hacked, and only so much can be done to thwart this threat. Companies must create unique approaches to minimize the impact of an attempted attack, and protect critical assets.
In particular, oil and gas companies need to focus on developing comprehensive security risk management plans tailored to the circumstances when entering high-risk environments, such as ventures into new geographic locations, markets and products. A recent ABI Research study predicted that cyber attacks against oil and gas infrastructure will cost companies $1.87 billion by 2018
3. Future competitive advantages depend on technological innovation.
Until recently, oil and gas companies did not innovate beyond what was required to pull resources out of the ground with a reasonable amount of success. However, there has been a noticeable shift as companies begin to view technology as a new frontier for competitive advantage.
Oil and gas companies are using the latest ideas, such as mobility, cloud computing, and knowledge management, and wrapping them around their current processes to make everything work better. However, as innovation takes off, companies must turn their attention to protecting the R&D that went into creating this intellectual property, which creates another layer of security that must then be implemented.
4. Striking the right balance between strong cyber risk management and regulation will become more challenging.
Regulations help companies secure themselves from cyber threats. However, regulations apply a one-size-fits-all method to security that does not take into account each company’s “attack surface,” the unique vulnerabilities that come with its specific business processes. Often there are competing priorities between addressing what is required by regulation and what is genuinely needed at the time to effectively protect the company’s systems from cyber intrusions.
Also, firms must always stay abreast of the constantly changing regulatory environment. Just as energy companies achieve compliance under current regulations, new regulations are developed. Oil and gas companies must balance a host of issues, such as compliance with environmental regulations, while balancing geopolitical issues that can have material impact on the bottom line.
5. An aging workforce is creating unique risk management, infrastructure, and HR challenges.
The oil and gas industry is facing a shrinking talent pool for those with specialized expertise. Most individuals who have the institutional and technological “know how” about their organization’s specific cyber risks and operations are looking toward retirement.
This creates a knowledge gap that younger employees cannot meet on their own, and requires oil and gas leaders to work across their business to capture, retain, and integrate human capital intelligence. According to Ernst & Young, nearly 90 percent of senior human resources executives at 22 top international oil and gas companies believe their industry faces a talent shortage and call the problem one of the top five business issues facing their companies.
6. Data will continue to create differentiators.
Oil and gas companies are facing an explosion in the amount and types of data that their assets generate, yet they risk being less competitive if they do not make this data work for them. Organizations must also understand that while their data presents business opportunities, it also raises certain challenges.
For example, industry leaders must determine how to analyze and present their data in a way that allows the firm to create action, both in terms of driving business strategies and in understanding anomalies associated with their critical assets.