WELCOMING ADDRESS

Alistair RiversGlobal Head of Willis Natural Resources

WHAT A DELIGHT!

From this… …to this!

A GLUT OF CAPITAL

n Growth in third party capital

n USD150 billion by 2020?

n Reinsurance market reductions across the board, regardless of location

n Obvious effect on direct Energy market

WORLD ECONOMIC FORUM TOP 10 GLOBAL RISKS, 20I5

Source: World Economic Forum Insight Report: Global Risks 2015

Top 10 risks in terms of Likelihood

1. Interstate conflict

2. Extreme weather events

3. Failure of national governance

4. State collapse or crisis

5. Unemployment or underemployment

6. National Catastrophes

7. Failure of climate change adaptation

8. Water crises

9. Data fraud or theft

10. Cyber attacks

Top 10 risks in terms of Impact

1. Water crises

2. Spread of infectious diseases

3. Weapons of mass destruction

4. Interstate conflict

5. Failure of climate change adaptation

6. Energy price shock

7. Critical information infrastructure breakdown

8. Fiscal crises

9. Unemployment or underemployment

10. Biodiversity loss and ecosystem collapse

Economic Environmental Geopolitical Societal Technological

WORLD ECONOMIC FORUM: KEY TRENDS 2015

Source: World Economic Forum Insight Report: Global Risks 2015

n Ageing population

n Climate change

n Environmental degradation

n Growing middle class in emerging economies

n Increasing national sentiment

n Increasing polarisation of societies

n Rise of chronic diseases

n Rise of hyper-connectivity

n Rising geographic mobility

n Rising income disparity

n Shifts in power

n Urbanization

n Weakening of international governance

$40 OIL - THE INDUSTRY’S BIGGEST CHALLENGE?

REGULATORY RISK

Renewable energy subsidies and… …permits for infrastructure development have a major bearing on competitiveness

NEW RISKS POSED BY GLOBALISATION

Source: World Economic Forum Insight Report 2015: Emerging Best Practice of Chinese Globalizers: Tackle the Operational Challenges

GEOPOLITICAL AND SECURITY RISK

Drives up operating costs, threatening project feasibility – close to key areas of energy production and transportation.

CYBER RISK

CYBER RISK

n Imperative to cut costs

n Integration of industrial control systems with other internet-based IT systems

n Lack of adequate security measures

n Destabilising factors in the geo-political environment

LATEST CYBER MARKET OFFERING

FINALLY – THE DANGERS OF OVER CONFIDENCE..

n Companies looking to retain more risk:

• Insurers have lower credit ratings

n Can be a mirage when disaster strikes:

• Any insurance in place will be welcome

n Insurance a hedge which can be a critical need

• Rightful role is to reduce volatility of financial results

An analytical approach can be crucial!

UNDERSTANDING, QUANTIFYING AND ARTICULATING…

Loss models

n Promote a better understanding of the exposures

n Enable an accurate pricing of the risk

n …and help in the allocation of appropriate levels of capital to offset

it

Analytics

n Provides a benchmark for pricing

n Give underwriters the confidence to price risks appropriately –

opening up more options for transferring these risks

n Reassures regulators, shareholders and the public that the

company is doing its best to understand its principal risks

n Allows oil companies - and insurers - to have confidence in risk

management, in conjunction with:

• Developing understanding of natural catastrophe risk

• More sophisticated engineering

A MORE DYNAMIC APPROACH TO RISK MANAGEMENT…

n The self-assurance to be more enterprising and

entrepreneurial

n More responsive to customers and the markets

they serve

n Motivates staff and suppliers

n Builds trust, by being more dependable

n Better results for shareholders

We look forward to many valuable conversations with you over the course of the next two days!

ENJOY!

Alistair RiversGlobal Head of Willis Natural Resources