Julian Metherell is the CFO of Genel Energy, a company with assets in high-risk areas. He provides some insight on corporate governance and high-risk investments in an interview.
As many professionals in finance understand, working in high-risk markets can often mean high rewards. But the challenges of high-risk markets can be overwhelming for some teams, and the unpredictability of these markets can be a major deterrent for interest by CFOs around the world.
Still, there are CFOs who are involved in high-risk markets and have been very successful. Often the risk involved is political and security or stability related. The rewards are often so exceptional that they outweigh the risks, but talented management and oversight is required to function in these environments.
Julian Metherell, CFO of Genel Energy, recently spoke of what it means to operate in a high-risk environment and how he manages the challenges. Genel Energy’s assets are located in Kurdish controlled areas of Iraq; this is certainly high-risk, but the oil production company believes the payoff will be well worth it.
Operating in High-Risk Areas
Julian expresses the importance of maintaining a strong, accurate, and up-to-date perspective on the risks of the region at all times. Otherwise, “Investors wouldn’t make an investment” in his company. The well-kept information and reports regarding risk are vital to presenting a solid and trustworthy picture to Genel Energy itself and to other investors.
Their management teams are not encouraged to spend money unless the opportunity meets Genel Energy’s needs. As Julian says himself, “There’s no management goal to spend that money. There’s a management goal to find attractive opportunities.” This proper perspective allows the company to operate more effectively in high-risk markets.
Julian has helped create “strong corporate governance combined with unrivaled regional expertise” to enable Genel Energy to operate in many high-risk high-growth areas around the globe, mostly in Africa and the Middle East. Additionally, Julian has been a supporter of Genel Energy diversifying and spreading its assets over a diverse geographical range. This is one of the few ways to mitigate impacts of high-risk assets succumbing to political or geopolitical problems that could derail the project.
One can learn a lot from this perspective if high risk areas are possible investment or expansion opportunities for you. Many companies operate successfully in high-risk areas, while some fail due to poor corporate governance or events out of their hands. Julian and Genel Energy show that there is a great deal a CFO and his team can do to determine how successful a company can be in these areas.