Risk management of petrochemical industry in Saudi Arabia Essay

Risk management of petrochemical industry in Saudi Arabia - Essay Example The top most leading players in this industry are the state owned company Saudi Aramco and the Saudi Basic Industries Corporation (SABIC), their rankings are also at the global level are being one of the largest producers of petrochemical products (Cordesman and Obaid, 2004). The raw materials for producing these products had been available in abundance but now it is being observed that there is shortage being observed in the raw materials and therefore the Saudi petrochemical industry need to work upon their risk management aspects of this industry. Shortages of raw materials from which the products are being produced tend to give rise to high risks in the future therefore it is important to start managing the risk factors beforehand. Risk Management Risk management is usually defined as the elements that cause risk to the organization and accordingly assessments and prioritization of risks are conducted for the purpose of risk management. Risk management plans are made to reduce, m inimize, monitor, and evaluate the risks so that opportunities can be maximized. Risks can be faced from the financial markets uncertainty, from the failures of projects, from legal liabilities, from the factors of credit risk, and other such factors (British Standards Institute, 20). Risk Options There are many types of risk options that can be used for the purpose of managing risk in the organizations. They are as follows (British Standards Institute, 73): Developing new processes of business so that the level of risk can be controlled Risks should be reassessed on a periodic basis Transferring of risks to external organizations such as insurance companies The avoidance of risks by closing down the business units that cause risk Many of the other petrochemical industries operating in Saudi Arabia are planning on with the establishment of acrylic acid complex plants so that any type of downturn in the industry can be overcome in the future. This is due to the changes in the success level trends observed in the country that new business units need to be developed so that the future challenges that are present in the industry forecast can be overcome by the industry. Risk minimization in petrochemical industry of Saudi Arabia The main aspects that should be carefully reviewed towards minimizing risk in the petrochemical industries of Saudi Arabia are (Athearn, Schmit, and Doerpringhaus, 80): 1. Management: All operations should be reviewed, maintenance and engineering operations should take place accordingly, check and control should be maintained for the fire safety and security features of the organization. 2. Procedures: all work operation operations should be carried out under the approved engineering standards so that while insurance premiums are opted for, no loopholes remain for them to gain benefits in times of risk. 3. Plants: the plant design should be according to standards as well, as well as the process controls in the plants and their housekeeping . 4. Protection Hardware: all hardware equipment being used in the plants of petrochemical organizations should be of proper quality. The higher amount of risk may be observed from the