In a recent webinar, Peter Saling of Hungarian oil and gas company MOL Group, showed how the company is using Palisade’s @Risk to perform ‘risk aggregation’ across all of its business units. MOL’s Enterprise Risk Management (ERM) methodology measures, manages and reports financial, operational and strategic risks using a common methodology.
MOL’s ERM model is used in strategic decision making—adding quantified risk analysis to the previous NPV-based project comparison. The ERM model tracks some 80 different kinds of risks using @Risk’s Monte Carlo simulation.
Saling outlined the procedure as follows. Firstly an NPV probability distribution for each asset is generated in @Risk, along with an estimate of Value at Risk (VaR). Next, RiskOptimizer is used to optimize MOL’s asset portfolio using efficient frontier analysis. New opportunities can then be evaluated in the light of the existing portfolio and the analysis updated to include new assets. MOL’s ERM application is now being extended to support capital allocation decisions, performance management and KPI goal-setting.
© Oil IT Journal - all rights reserved.