A Risky Business
Life is full of risks. In our industry, a failure to correctly assess risk has the potential to be displayed on an international stage through the global media. We face complicated and potentially costly challenges every day that we assess so we can follow a reasonable course of action. Each decision is a measure of how we see the given situation and how our experience and training guide us on how to progress. We also measure risk on a personal level for our own job security and to achieve our goals of career progression. Various tools and processes are available to analyze risk, and these can be used to quantify our decisions. In this issue, we explore the awareness of those tools and perception of young professionals toward risk from both a personal and a professional perspective.—John Donachie and Loris Tealdi, TWA Forum Editors
This survey of young professionals explored two risk-related topics—risk perception and the value of risk analysis—and received the highest number of responses to a TWA Forum survey to date with a total of 739 respondents. About half of those were from North and South America, and almost two-thirds of respondents were from companies with more than 3,000 employees. The median age was in the range of 28–31 years. The male/female ratio was 80:20, and more than 50% of people who completed our survey had more than 5 years’ experience in the industry.
Question 1: You have been requested by your company to move to a new assignment in a country that is considered risky in many respects (health, security, etc.). This challenging position with a high level of responsibility offers excellent career development potential. The salary is 30% higher than your current income. Your spouse/partner has a great job in your current location. Would you accept this new assignment and the risks associated with it? (Select one of the 5 options)
“If you don’t know where you are going, all roads will get you there.”—The Cheshire Cat, Alice in Wonderland, by Lewis Carroll
Almost half of the respondents would accept the assignment, but only if their spouse was willing to come with them, and they would decide as a couple. A negative answer was received from 36% of our responders; career is not at the top of their priority list for 25%, and 11% would look for opportunities in another company. Fifteen percent would accept the job without conditions (Fig. 1).
Interesting trends were observed by analyzing the results with regard to the age of the respondents and years of experience. The younger the respondent, the more his career was at the top of his priority list and the more likely that he would accept the position only if his spouse/partner accompanied him. The older the respondent, the more likely his career was not at the top of his priority list and that he would refuse the offer (Fig. 2). The plot shows the change in priorities with increasing experience.
The strongest revelation from this is that family is extremely important across all geographic locations when career relocation decisions are made. The importance of the spouse/partner being able to find equivalent employment was also very important, as was the availability of a safe and secure environment for the family, although some level of risk was considered manageable. Males viewed their careers as a priority slightly more than females, while females were slightly less inclined to accept the position if their spouse/partner did not accompany them.
The results are in line with the results acquired from the previous TWA Forum on “Changing Career Directions,” in which motivating factors at work were defined. In particular, it was found that the “must have” parameters for motivation were job opportunities and challenges, as well as work/life balance. Responses to this issue’s survey highlight how crucial work and private life requirements are to people, especially as we age and our responsibilities outside of work increase. Offering opportunities for spouses/partners in hardship postings would represent a solution for companies who are struggling to find people for such locations.
Here are some representative comments of some who have already experienced this situation:
- “Having previously accepted such offers in the past, I have now come to the conclusion that there is more to life than career development and money! The quality of life as well as the security risks are not worth the extra money. What good is the money if you are dead?”
- “I have faced this exact scenario and decided to turn down the offer, mainly because of family pressure and due to my own situation. This was a very attractive offer but, to me, I work for a living not live for work, although I am also passionate about my job. At the end of it all, the most important part of my life is my family.”
- “I am lucky that my wife is happy for my career to take priority. In fact, I took an assignment as described above 2 years ago, and I am currently enjoying it. The assignment was an ideal opportunity for my wife to take a break from work and for us to start a family. The loss of income from my wife’s work is not offset by my increased salary, but when we consider that she would have lost her salary anyway to have children, the assignment has been an ideal opportunity.”
Our industry operates in many of the most difficult regions of the globe, and an understanding of how success can be achieved in those areas is crucial. We established through the responses to our first question that personal circumstance and a family consensus will drive motivation to travel to hazardous locations. Attractive remuneration packages are offered to make work in hazardous locations more appealing from a financial perspective, and reasonable safety considerations are made in a given country to increase the level of safety if your family travels with you. From the comments, there was some degree of understanding that companies and management are under pressure to achieve results and be profitable at the bottom line, so people need to recognize this and go where the requirement is, accepting some level of risk. Consequences for not accepting assignments depend to a large degree upon company culture and employee orientation. In some companies, declining a move is regarded as not being a team player, while in others there is more tolerance for an employee’s circumstances. In most cases, however, there was the feeling that management expects employees to evaluate the circumstances associated with an assignment, but hopefully choose in favor of the company’s interests.
Question 2: What are the most risky aspects of the oil business?
We asked this question to gauge and prioritize the perception of risk in our industry. The options provided are a mixture of technical uncertainty, personal safety considerations, and career considerations. The results have been grouped into three categories of perceived risk based on the frequency of response: green for highest risk, followed by medium (yellow) and low (red) perceived risk (Fig. 3). The most risky aspect of the oil business, according to survey respondents, is geopolitical instability, followed by the scarce availability of subsurface information, which makes the risk associated with oil-business-related projects significantly higher than in other industry sectors. These parameters make the financial success of projects uncertain (third preference); after these major business-related risks, which account for almost 40% of the preferences, the work/life balance scores high with almost 10% of preferences, indicating again that today’s young professionals pay a lot of attention to this aspect, as all our surveys continue to indicate.
It is interesting to observe that two-thirds of the preferences were given to company-related risks and only one-third to personal risks. Since it is perceived that most of the risk is faced by the companies, how do they face it? What is their attitude toward risk analysis?
The Value of Risk Analysis
“It isn’t that they cannot see the solution. It is that they cannot see the problem.”—G.K. Chesterton
The important thing about risk analysis is not the conclusion itself, but rationalizing the route toward it. This begins with decision framing. To frame the decision and ultimately understand your risk, you need to be able to evaluate a problem from various angles. This may mean that you need to bring the individuals involved in a project together and document the various components and factors that surround a problem. The next step is to perform uncertainty analysis. The aim is to recognize and correctly weigh the influencing factors on a risky proposition in an attempt to control the overall complexity and simplify the decision-making process by eliminating irrelevant factors. Both of these steps are conducted while maintaining a strong decision-maker dialogue. This ensures that each element of the decision-making process meets with the approval of those involved in the ultimate decision. Without the correct training, framing a decision on a large scale can be complex or extremely simple to do badly. By operating a decision-making process, you give the opportunity to those involved to voice their concerns and comments. These are then weighed, agreed upon, and then analyzed to give a map of the potential routes forward. To work in this way often means a change of culture for an organization. Building awareness and offering the correct training is the first route toward this goal.
Question 3: Does your company offer training in risk analysis?
Our responses (Fig. 4) indicate that this process is under way in many parts of our industry, with 60% of the companies offering training, either internal or external, in risk analysis, while 19% offered informal training. Given the recent importance placed on risk analysis in the industry, it is surprising to note that 20% of respondents say they are not aware of any risk-analysis training provided inside or facilitated outside of their organizations. If you are unaware of risk analysis, then it is important to seek it within your organization.
Question 4: Risk analysis is.…
The responses received (Fig. 5) indicate that many understand the role that risk analysis plays in our industry. Many were not caught out by some of the more obvious misconceptions about how we use risk analysis as a tool to understand uncertain situations and aid in the decision-making process. Risk analysis will not replace a professional’s judgment or intuition, nor will the quality of a decision be reflected in the quality of the outcome. It certainly should not be used as a method of justifying a path that has already been decided by modifying inputs to reflect the “right” decision. However, 15% of respondents did not catch the fact that risk analysis is not a tool that removes risk. It does not reduce or eliminate the risk from the situation you are examining. It is, however, something we can use to better understand potential risk and accommodate it within our decision making.
Representative comments are as follows:
- “Risk looks at the unknowns in a project and tries to quantify these. I sometimes feel, though, that this is done too late in projects, and at that point there are so many sunk costs and people/feelings associated with the projects that it is hard to look at things objectively, especially if the outcome of the risks being too high results in the end of a project.”
- “You can never really eliminate risk. It is just a matter of managing how much cost we are willing to incur for the negative consequences of a particular action. If we believe the benefits are worth the possible negative impact, then we have adequately applied risk analysis.”
- “Risk analysis can take subjective issues related to a decision and put them into objective numbers. It can help understand positive and negative consequences of a decision. It does not always find an optimum solution, but it can help point the decision maker in the right direction.”
- “Risk analysis does not eliminate risk. It is a tool to make better decisions with regard to uncertainties in the inputs.”
Question 5: Decision and risk analysis are appropriate when….
If we have all of the available information to resolve a complex problem, then decision making is easy. But life just is not like that. We can illustrate this by using Donald Rumsfeld’s infamous quotation about the certainty of information:
“There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don’t know. But there are also unknown unknowns. There are things we don’t know we do not know."—Donald Rumsfeld
This succinctly summarizes the challenge of risk analysis and how problems should be analyzed when we frame our problem. Approaching a problem with no knowledge and no route toward gathering information will ultimately and obviously lead to a bad decision. A large majority, 79%, of respondents agreed that “decision and risk analysis are appropriate when the best option is not obvious” (Fig. 6).
It is when you do not have a handle on the available options, or when some options appear to be equally weighed, that you exercise a risk-analysis process. To do the process justice, you need to correctly frame the environment within which the decision will be made, and this is achieved by asking open-ended questions of those involved. Some examples of these questions are as follows: What are we trying to answer? What information do we have on the question we are trying to answer? What alternatives can we consider? What are we not trying to answer?
Using risk analysis to justify decisions that have already been made is a dangerous practice, and, given that 12% of the respondents said that “decision and risk analysis are used to develop a rationale for a decision that has already been made,” it is clear that this happens in some circumstances. The benefits of risk analysis are in the exploration of potentials that guide you toward the correct decision. If the decision has been made, then where is the value in risk analysis? The realities and time constraints of daily life mean that decisions based on intuition and experience are made all of the time. Instituting a risk-analysis process before final decision time will draw on the experience and intuition of as many stakeholders in the final outcome as is practicable and will improve your result.
Some of the most interesting comments follow:
- “In many cases, gut feeling and experience alone do not define a clear ‘best choice’ in the plan forward. Sometimes a more objective process is required to minimize the gray areas in between different options for forward action.”
- “By brainstorming possible risks and solutions with all disciplines involved, you can come up with a solution you would not have thought of, or [would not have] thought was viable. Economic factors also need to be taken into account, and some options may come out with the same risk as a much cheaper option.”
- “If the best option is obvious, a risk analysis still needs to be carried out, as every person tends to become ‘business blind.’ Having an independent evaluate the decision process will help identify potential risks overlooked by the team involved in the project continuously.”
- “For major project decisions, there are often many factors involved and, therefore, following a process or simply having a formal meeting with a facilitator who has done much decision/risk analysis work can make all the factors align so that the most reasonable solution can be taken. It also takes the gut feeling out of decision making, because the loudest person’s gut feeling is sometimes the route that teams take.”
Our statistics indicate that family needs appear to exceed career ambitions when considering a posting in a potentially hazardous location; on the other side, young professionals understand that most of the oil fields are located in difficult areas and that business requirements may be difficult to match with the family ambitions. Geopolitical instability is considered to be riskiest aspect of the oil and gas business, and this affects both our personal decisions and professional decisions on how to operate in difficult areas. Given the uncertainty and unavailability of data in our industry, it is reasonable to perform decision and risk analysis to establish the best course of action. Many of our respondents understand this and are aware that training is available in the industry. Many, but not all, of our respondents understand the purpose of risk analysis as a tool to be used when the best option is not obvious. Some have the misconception that we use analysis to reduce or eliminate risk, whereas we use it to understand risk. Overall, the responses indicate that people are aware that the risk landscape must be explored in order to make right decisions.
“Everything should be made as simple as possible, but not simpler.”—Albert Einstein
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