The environmental consequences of disasters in the Arctic have the potential to be worse than in other regions. The resilience of the Arctic’s ecosystems in terms of withstanding risk events is weak, and political sensitivity to a disaster is high. As a result, companies operating in the Arctic face significant reputational risk.It’s easy for oil companies to dismiss environmentalists concerned about the Arctic as politically-motivated. But when a centuries-old company that has made billions of dollars judging risks and insuring everything from Betty Grable’s legs to the World Trade Center’s new Freedom Tower, thinks an operation might be a little too edgy for them, it ought to make oil companies stand up and take notice. Richard Ward, Lloyd’s chief executive, “urged companies not to ‘rush in [but instead to] step back and think carefully about the consequences of that action’ before research was carried out and the right safety measures put in place.” Lloyd’s report includes a laundry list of reasons why oil companies ought to hit the pause button on offshore Arctic drilling, including:
- Significant knowledge gaps across the Arctic need to be closed urgently
- Arctic conditions will remain challenging and often unpredictable
- The environmental consequences of disasters in the Arctic are likely to be worse than in other regions
- The politics of Arctic economic development are controversial and fluid.