iRisk: A New Practical Guide to Cross-Functional Risk Leadership in Oil and Gas Mega-Projects
Authors: Kenzhetayeva Zarina , Holding Peter , Stig Carsten 
Published: November 2016

Abstract
How can mega-projects reduce performance failures? This question has added significance in the current market environment which became a financial pitfall for many ventures that have fallen short of initial projections. Projects owners seek to manage risk exposures across all organizational levels and incur the right kinds of risks to prevent erosion of business value. This paper introduces the iRisk – a new integrated approach developed to address challenges at Operations, Project and Enterprise levels within a common framework. The case study provides contingency recommendations, flowcharts, correlation matrices and diagrams based on results of the practical application in the onshore oil and gas Mega-project.
The overall methodology is summarized in the following key milestones. 1st Process walkthroughs to snapshot internal system and identify areas of gaps and overlaps. 2nd Value and interaction mapping for visual alignment of operational, project, business challenges and the first level insight of potential interfaces. 3rd A trial assessment of interrelated challenges, their criticality to the project and potential manageability. 4th Development of a macro picture and re-design of risk management framework, process, and governance model; identification of optimal strategy and connection of interfaces through risk intelligence philosophy.
The iRisk methodology was applied to the Mega-project situated near the Caspian Sea. During walkthroughs, it was observed that the Operations team was mainly challenged by field activities, the Project team by design and planning, and the Enterprise team by business performance and cost recovery issues. Difficulties in determining correlations included differences in functional targets, risk criteria and matrices set up, assessment time frames (short and long-term), and a large number of components required for a portfolio-wide view. Samples taken from each team for trial quantification of the monetary impact of equally ranked risks were simulated. Results measured in value change had varied within 10% deviation range which caused bias in criticality and treatment priorities within teams. Probabilistic techniques were further used to establish a baseline for the integrated criteria. Full-scale implementation of the proposed approach reduced the judgment bias, improved transparency of interfaces and set the basis for coordinated assessments moving up the overall maturity curve in a management of cross-functional challenges.
The novelty of iRisk is in its robust and coherent approach that represents a critical change from the traditional qualitative views adopted in the petroleum business. It guides project teams with tools to numerically aggregate and map risk interactions and correlations applying greater precision on uncertainties. Would this help reduce performance failures? The answer is definitely "yes", but it requires from leaders at every level execute the process in a structured and disciplined fashion, and willingness to think outside the proverbial box.