Energy Risk
From Open Risk Manual
Definition
Energy Risk denotes the uncertainty and potential impact to an entity's objectives of the availability and cost of different forms of energy.
Risk Taxonomy
Energy Risk is a type of Commodity Risk. In contrast with other commodities that refer to material substances (solid, liquid or gaseous, organic or inorganic) energy is an intangible property of matter.
Context
Energy risk materializes in the context of a given Energy System, the set of physical and societal elements that enable and govern the provision of different forms of energy in an economic system.
Manifestations
- Energy Access to the desired forms of energy
- Energy Security, or ability to maintain access to the desired forms of energy. Disruption of energy provision further create various forms of Operational Risk
- Cost Risk of securing the desired forms of energy which for corporate entities may determine Business Model viability
- Legal Risk (liabilities) from Externalities associated with Energy Consumption and Stranded Assets in connection with the utilization (production, transformation or consumption) of energy forms
Issues and Challenges
Energy risk has been elevated into a significant Risk Type due to a combination of environmental and geopolitical events.