Giving Compass' Take:

• Tom Carver speaks with Alfred Marcus on his case study of decision-makers in the energy industry facing two major uncertainties: oil price volatility and climate change.

• How can funders invest more in solar and wind energy projects around the world?

• Here's an article on why clean energy must accelerate to stop climate change. 

Managing uncertainty is at the very heart of risk mitigation. A lot of management time consists of assessing how a market might develop and how to position an organization over the next few years.

In his recent book, "Strategies for Managing Uncertainty," Alfred Marcus of the University of Minnesota Carlson School of Management examined how decision-makers in the energy industry make choices when faced with two major uncertainties.

Tom Carver, BRINK’s executive editor, asked him why he chose the energy sector for such a study.

Alfred Marcus: Both oil and gas and automotive companies are making long-term investments, very expensive bets on the future. They don’t know what the price of oil and gas is going to be at the point when they expect to have a return from these investments.

As renewable fuels become much cheaper, the question they face is: How quickly is the world going to transition to this new world, and what kinds of investments should they make today given that this transition is taking place?

Tom Carver: You write in your book about organizations needing to move away from maximizing shareholder value in order to manage this risk. How did this manifest itself?

Marcus: What the oil and natural gas and the automotive companies are doing is having to operate in two worlds at once, hedging their bets. They are both operating within the principles, framework and logic of the current world, which is dominated by fossil fuels. And at the same time, they are operating on the basis of a future logic, which they assume, at some point in time, will come into play, and which will be dominated by renewable energy to a much greater extent, electrification to a much greater extent. So they had to balance between the two.

Read the full article about managing the energy sector by Tom Carver at GreenBiz.