BP 2010 Annual Report Download - page 106
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Please find page 106 of the 2010 BP annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Corporategovernance
Committee activities
Earlyin2010thecommitteedeterminedthatSirWilliamCastellshould
takeontheroleofseniorindependentdirectorupontheretirementofSir
IanProsserfromtheboardatthe2010AnnualGeneralMeeting.
FollowingtheaccidentintheGulfofMexico,thecommitteekept
underreviewtheabilityofBP’sbusinessorganizationtorespondtothe
challengesthatarosewhileensuringtherewascontinuedfocusonthe
effectivenessoftherestofitsglobalbusiness.Thisinvolvedensuringthat
theboardwasfocusingontherightissuesandorganizingitselfinan
appropriatemanner.ThroughoutthecrisisintheGulfofMexicothe
committeehasactivelyconsideredthecompany’srelationswith
shareholdersandotherswithwhomitcameintocontact,particularlystate
andfederalgovernments.
Thecommitteeevaluatedtheperformanceofthegroupchief
executiveinearly2010andformallyreviewedsuccessionplanningwithin
thegroupinSeptember2010.Thecommitteewascentraltodiscussionsin
thesummeroverthefutureofTonyHaywardasgroupchiefexecutiveand
hisreplacementbyBobDudley.
ThecommitteereviewswithBobDudleyhisproposalsforthe
enhancedsafetyandoperationfunctionandhisreorganizationofthe
ExplorationandProductionsegmentonthedepartureofAndyInglis.There
wasnoformalevaluationofthechairmaninearly2010ashewasonly
recentlyinpost.Hisperformancewasevaluatedinearly2011aspartofthe
overallevaluationoftheboard.
Thecommitteereviewedtheskillsoftheboardandformed
collectiveviewsofthoseneededtomeetthechallengesofthecompanyfor
thefuture.Thechairman’scommitteeworkedcloselywiththenomination
committeeinmattersaroundexecutiveandnon-executivesuccession.
Riskmanagementandinternal
controlreview
Indischargingitsresponsibilityforthecompany’sriskmanagementand
internalcontrolsystemsundertheUKCorporateGovernanceCodeandthe
June2008CombinedCode,theboard,throughitsgovernanceprinciples,
requiresthegroupchiefexecutivetooperatewithacomprehensivesystem
ofcontrolsandinternalaudittoidentifyandmanagetherisksthatare
materialtoBP.Thegovernanceprinciplesarereviewedperiodicallybythe
boardandareconsistentwiththerequirementsoftheUKCorporate
GovernanceCode,includingprincipleC.2(riskmanagementandinternal
control)andtheJune2008CombinedCode,includingprincipleC.2
(internalcontrol).
Theboardhasanestablishedprocessbywhichtheeffectivenessof
theriskmanagementandinternalcontrolsystemsarereviewedasrequired
byprovisionC.2.1oftheUKCorporateGovernanceCodeandtheJune
2008CombinedCode.Thisprocessenablestheboardanditscommittees
toconsiderthesystemsofriskmanagementandinternalcontrolbeing
operatedformanagingsignicantrisks,includingstrategic,safetyand
operationalandcomplianceandcontrolrisks,throughouttheyear.The
processdoesnotextendtojointventuresorassociates.
Aspartofthisprocess,theboardandtheauditandsafety,ethics
andenvironmentassurancecommitteesrequested,receivedandreviewed
reportsfromexecutivemanagement,includingmanagementofthe
businesssegments,divisionsandfunctions,attheirregularmeetings.
Inconsideringthesystems,theboardnotedthatsuchsystemsare
designedtomanage,ratherthaneliminate,theriskoffailuretoachieve
businessobjectivesandcanonlyprovidereasonable,andnotabsolute,
assuranceagainstmaterialmisstatementorloss.
Duringtheyear,theboardthroughitscommittees,regularly
reviewedwiththegeneralauditorandexecutivemanagementprocesses
wherebyrisksareidentied,evaluatedandmanaged.Theseprocesses
wereinplacefortheyearunderreview,remaincurrentatthedateofthis
reportandaccordwiththeguidanceontheUKCorporateGovernance
CodeandtheJune2008CombinedCodeprovidedbytheFinancial
ReportingCouncil.InDecember2010,theboardconsideredthegroup’s
signicantriskswithinthecontextoftheannualplanpresentedbythe
groupchiefexecutive.
Ajointmeetingoftheauditandsafety,ethicsandenvironment
assurancecommitteesinJanuary2011reviewedareportfromthegeneral
auditoraspartoftheboard’sannualreviewoftheriskmanagementand
internalcontrolsystems.Thereportdescribedtheannualsummaryof
internalaudit’sconsiderationofelementsofBP’ssystemsofrisk
managementandinternalcontroloverrisksarisinginthecategoriesof
strategic,safetyandoperationalandcomplianceandcontroland
consideredthecontrolenvironmentthatrespondstorisk.Thereportalso
highlightedtheresultsofauditworkconductedduringtheyearandthe
remedialactionstakenbymanagementinresponsetosignicantfailings
andweaknessesidentied.
Duringtheyear,thesecommitteesengagedwithmanagement,the
generalauditorandothermonitoringandassuranceproviders(suchasthe
groupcomplianceandethicsofcer,headofsafetyandoperationalriskand
theexternalauditor)onaregularbasistomonitorthemanagementofrisks.
Signicantincidentsthatoccurredandmanagement’sresponsetothem
wereconsideredbytheappropriatecommitteeandreportedtotheboard.
AsdisclosedelsewhereinthisAnnual Report and Form 20-F 2010,
materialinternalcontrolaspectsoftheGulfofMexicospillarebeingdealt
withthroughtheestablishmentoftheGulfCoastRestorationOrganization
andtheimplementationoftherecommendationsofBP’sInvestigation
Reportandthroughtheconsiderationofotherreportsandinvestigations,
someofwhicharestillinprocess.
TheGulfCoastRestorationOrganizationwassetuptomanagethe
company’sresponseactivities.Thisorganizationhascreatedtheframework
designedtoenablethecompanytomanagetheoperationsand
transactionsnowarisingfromtheincident;includingclean-upand
restorationcosts,claimsmanagementandlitigation.
104BPAnnualReportandForm20-F2010