SOCAR VP says many local companies lack risk management systems

Many local companies operating in Azerbaijan have not yet established risk management systems, according to Vice President of the State Oil Company of Azerbaijan (SOCAR) Zaur Gurbanov.

He made the remarks at the “First Risk and Resilience Conference in Azerbaijan” organized by the American Chamber of Commerce in Azerbaijan (AmCham Azerbaijan).

According to Gurbanov, in the absence of a risk management system, risks are handled at the operational level and are often based on personal experience.

“Even in companies where risk management systems formally exist, the lack of real implementation creates additional risks. When new risks emerge and there is no systematic approach, companies begin reacting only after incidents occur. This creates serious problems for businesses. Identifying risks, calculating the probability of their occurrence, creating a risk register, and monitoring mitigation measures should become an integral part of the management process,” he said.

He noted that Azerbaijan’s financial sector, particularly banks and insurance companies, has more developed risk management practices.

“This stems from both legislation and the requirements of regulatory authorities. The financial sector carries not only its own risks, but also the risks of other economic entities. In the business environment, there is прежде всего a need to establish practical and simple risk management mechanisms,” Gurbanov added.