BP 2012 Annual Report Download - page 32

Our management of risk
A new mission control
in Houston
Developed as part of our ongoing
commitment to enhance risk management,
BP’s Houston monitoring centre is a
state-of-the-art onshore facility that helps
reduce risk by monitoring data from our rig
operations in the Gulf of Mexico and providing
an additional level of assurance to offshore
teams. The facility is similar to the control
centre used for space shuttle launches, which
is no coincidence – a former senior NASA
manager helped to develop its functionality.
Armed with real-time information feeds, live
video and constant communication with
colleagues on the rigs, teams at the facility
monitor data from drilling operations 24 hours
a day. Onshore experts are primed to escalate
issues up the chain of command offshore if
they spot potential incidents. We also monitor
the monitors, carrying out a programme of
inspections and emergency drills to test the
resilience of this collaborative early warning
system.
The following is a summary of how we seek to
manage the risks we have identified as having a
high priority in 2013. There can be no guarantee
that our risk management activities will mitigate
or prevent these, or other, risks from occurring.
Strategic and commercial risk
We aim to manage risks associated with the
general macroeconomic outlook, and changes in
prices and markets, by responding to early
warnings from our economics and treasury
teams and customer-facing businesses. To
manage our liquidity, financial capacity and
financial exposure risks, we apply our financial
framework and we conduct liquidity stress
testing and interventions based on scenario
planning (see Liquidity and capital resources on
pages 90-93).
The diverse locations of our operations around
the world expose us to a wide range of political
developments and consequent changes to the
economic and operating environment. For
example, our investments in Russia could be
adversely affected by heightened political and
other social and environment risks. As such, we
try to actively manage our relationships in
Russia, including with the Russian federal
government. We are also focused on
completing our agreement to sell our interest in
TNK-BP to, and purchase interests in, Rosneft.
Many of our major projects and operations are
conducted through joint ventures or associates
and through contracting and sub-contracting
arrangements where BP may not have full
operational control. We seek to manage the
risks arising from such joint venture and
contractor relationships actively, and this may
include monitoring compliance with applicable
standards.
In 2011 we set out a 10-point plan to address
our near-term strategic priorities. Among other
things, the plan aims to target investments and
disposals efficiently, renew and reposition our
portfolio and deliver our major projects to plan.
As part of managing the risks to delivery of the
10-point plan we conduct regular planning and
performance-monitoring activity, including the
planning of disposals; we focus on the
successful delivery of major projects; and we
pursue the development of continued
technological advances and innovation.
Our system of risk management identifies and provides the response to risks
of group significance through the establishment of standardized
requirements and controls.
Risk management
For information on BP’s risk management
system see Risk in BP on page 117.
Risk factors
For the risk factors that could have an
adverse effect on our business see
pages 38-44.
Business review: Group overview
BP Annual Report and Form 20-F 2012
30