The failure of multiple process and safety systems is the most common cause of the largest property damage losses in the global energy industry over the past four decades, according to a report published today by Marsh at its bi-annual National Oil Companies (NOC) Conference being held in Dubai.
The 23rd edition of Marsh’s report, The 100 Largest Losses, details the most significant property damage losses in the global hydrocarbon extraction, transport, and processing industry since 1974. According to Marsh’s report, seven of the 100 largest property damage losses have occurred since 2012.
Marsh estimates that the global energy sector has sustained property damage losses in excess of $34 billion since 1974, based on current estimated values; with the majority attributable to offshore and refining incidents.
Andrew George, Chairman of Marsh’s Global Energy Practice, commented: “The global energy sector is becoming increasingly sophisticated in its approach to risk management, most notably in the deployment of new technologies and in emerging markets.
“However, none of the losses detailed in Marsh’s report should be considered ‘black swan’ events. These accidents generally occurred because of the failure of a number of inter-linked control barriers within process and safety management systems.
“The proper maintenance of these barriers depends not only on them being routinely inspected and audited, but also on senior management’s clear support of the safety processes. Continued risk minimisation in the global energy sector depends on maintaining vigilance on new and developing threats, and forming strategies to prevent and mitigate their impact.”
Marsh’s NOC conference takes place under the patronage of His Highness Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai. The Twitter hashtag for the conference is #MarshNOC; special reports and updates are available from the conference’s website.
The 20 largest losses
Of the 20 largest losses, eight occurred in the US, three in Europe and two in Brazil. The Piper Alpha explosion in the North Sea in 1988 remains the costliest property damage loss, at $1.81 billion (inflated to December 2013 value).
Marsh is a global leader in insurance broking and risk management. We help clients succeed by defining, designing, and delivering innovative industry-specific solutions that help them effectively manage risk. We have approximately 27,000 colleagues working together to serve clients in more than 100 countries. Marsh is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy, and human capital. With more than 54,000 employees worldwide and approximately $12 billion in annual revenue,