--> Implementing Risk Analysis in Exploration Organizations: What Works? What Doesn't?, by P. Rose; #90986 (1994).
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Abstract: Previous HitImplementingTop Risk Analysis in Exploration Organizations: What Works? What Doesn't?

Peter Rose

Exploration firms that have been utilizing a consistent system for risk analysis (RA) of all ventures in their exploration program already know that it improves economic performance, by:

1. identifying and deleting prospects unlikely to be profitable;

2. promoting consistency in allocation of capital among competing ventures according to merit;

3. improving cost-effectiveness and manpower utilization by highlighting those emerging exploration leads having the greatest profit-potential;

4. forecasting future results of current prospect inventories; and

5. encouraging systematic improvement of exploration predictive performance.

Over the past four years, many domestic and international companies have made the purposeful decision to set up consistent, company-wide exploration RA procedures. When they take this step, it inevitably changes the corporate

culture, operating values and tactics, and reward system. Adoption of exploration RA goes hand-in-hand with reorganization.

Each company that undertakes this move usually encounters about 9 to 18 months of turmoil, during which time it believes itself to be plowing new ground. In fact, however, there are characteristic--almost expectable--organizational behaviors and responses that tend to recur among all firms. Prior awareness of such patterns can help make the transition much smoother and more efficient.

In the end, two fundamental requirements must be met for successful adoption of an organizational RA system:

1. Top Management must understand the basis and application of RA, and be willing to support implementation of the RA system by inspection, follow-through, and enforcement; and

2. Exploration Staff must thoroughly understand RA concepts and their proper geologic/economic applications, and accept responsibility for unbiased predictive performance.

AAPG Search and Discovery Article #90986©1994 AAPG Annual Convention, Denver, Colorado, June 12-15, 1994