ASSESSING THE RISKS OF ENERGY SHORTAGES AND THEIR IMPACT ON OPERATIONAL MANAGEMENT

Abstract

The article looks into the essence of energy deficit risks that belong to an objective category of risks and their operational management consequences on the one hand and in the business environment on the other. With continually increasing energy demands coupled with variable supply conditions, organizations in multiple sectors are now facing a greater responsibility for better understanding the makeup of energy deficit risk. Price volatility, supply chain disruptions, geopolitical uncertainties or any other issue that can manifest in the operational challenges is covered in this category. This study defines energy deficit risks and contextualizes it within the larger framework of operational risk management. How the risks emerge from both external factors (like market dynamics and political instability), and internal factors (poor energy use and poor contingency planning) is highlighted by it. This article aims to give a comprehensive overview of the sources and manifestations of energy deficit risks with the intention to enable managers to be able to deal with the energy management complexities. Additionally, the article elaborates on the direct effects of energy deficits on operational efficiency. Energy shortages create disruptions in the production schedule of businesses, increase operating costs, and thwart achievement of consumer demand. Not only does these challenges affect the organisation’s performance, but this also refers to sustainability and competitiveness in the market. The article also outlines different strategies that a company can take to lower energy deficit risks alongside the challenges. The strategies in question include diversifying sources of energy, making investments in energy efficient technologies, and carrying out investment in demand side management. An organization can build resilience to energy supply fluctuations and the impacts of energy deficits by introducing a proactive approach for energy management. Overall, this article adds to the existing body of knowledge of operational risk management by discussing energy deficit risks in detail and highlighting their implications to business. This presents a need for in-depth research in this important area and provides support for consideration of energy management in operational strategies. Through this, the article aims to assist practitioners in finding effective energy management frameworks that also safeguard their operations while helping lead to a cleaner and more efficient energy future.