The character of the natural resources industry is changing. Set against a background of global warming, changes in the international legal environment, and the astonishing growth in e-commerce, it's already clear that the twin trends of globalization and consolidation - driven by the increasing need for companies to deliver maximum shareholder return - have revolutionized the character of this market sector.
It's now commonly accepted that a traditional, one-dimensional approach to risk management can actually prevent a company from maximizing its returns to shareholders; this is particularly relevant in the natural resources sector due to the many new and often hidden risks that energy companies now face:
- Environmental. Perceived global warming, political fragmentation, population explosion, changes in the legal environment, nuclear proliferation, and other natural phenomenon can be assessed and in some cases mitigated.
- Operational. Fire, blow out, explosion, and business interruption can be insured in addition to risks such as damage to brand name or reputation, supplier failure, industrial espionage, and shutdown risks.
- Legal. Corporate governance, joint venture disputes, contract risk negotiation, directors' and officers' liability, ERISA liability, and pollution liability, as well as traditional exposure to third parties.
- Political and Regulatory. Confiscation, nationalization, and expropriation are well known political risks, but many natural resources companies also have significant exposure in respect of kidnap and ransom, antitrust/collusion, transmission confiscation, Tariff/PUC risks, regulatory FERC risks, and environmental/CAA &MGP exposures.
- Human Capital. The loss of a key employee or associated loss of intellectual property, failure to comply with best employment practices, and incidents involving workplace violence can have a profound effect on your company's performance.
- Financial. A natural resources company's overall performance is also affected by a variety of financial and economic risks such as fluctuations in stock market values, commodity prices, interest rates, and exchange rates.
American Indemnity is the global leader in this industry. Contact us about how we can use that leadership to your benefit.