Abstract
Oil exploration and production industry faces more business risk than any other industry and therefore the risk management comes to be specially important for it. It may be helpful to recognize the kinds of the risk in this business and to understand how much which risk can be controlled by what kind of measure and which risk cannot be done so. At first it is important to make a quantitative analysis of the various risk in the E&P business. Risk management can be done as a risk control and a risk hedge. The typical risk control measure is the JNOC's financial support and risk hedge can be done in terms of currency risk hedge and oil price hedge. There are several ways of market risk hedge using financial derivatives such as SWAP, FLOOR and COLLAR. When we see the various kinds of risk in E&P business through its life span, we can understand the significance of the risk management.
