BP 2014 Annual Report Download - page 51

Risks for particular oversight by the board and its
committees in 2015
The risks for particular oversight by the board and committees in 2015
remain the same as those for 2014 except that we have replaced risks
associated with delivery of our 10-point plan, which has now been
delivered, with those relating to major project delivery – one of our group
key performance indicators.
Gulf of Mexico oil spill
A wide range of risks have arisen as a result of the Gulf of Mexico oil
spill. These include legal, operational, reputational and compliance risks.
BP’s management and mitigation of these risks is overseen by the board’s
Gulf of Mexico committee, which seeks to ensure that BP fulfils all
legitimate obligations while protecting and defending BP’s interests.
The committee’s responsibilities include oversight and review of the
following activities: the legal strategy for litigation; the strategy connected
with settlements and claims; the environmental work to remediate or
mitigate the effects of the oil spill; management strategy and actions to
restore the group’s reputation in the US; and compliance with government
settlement and administrative agreements arising out of the accident and
oil spill.
See Legal proceedings page 228, Financial statements – Note 2 and
Gulf of Mexico committee page 69 for further information.
Strategic and commercial risks
Geopolitical
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. Geopolitical risk is inherent to many regions in which
we operate, and heightened political or social tensions or changes in key
relationships could adversely affect the group.
We seek to actively manage this risk through development and maintenance
of relationships with governments and stakeholders and becoming trusted
partners in each country and region. In addition, we closely monitor events
(such as the situation that arose in Ukraine in 2014) and implement risk
mitigation plans where appropriate.
Major project delivery
Renewing our portfolio requires ongoing innovation and development in
exploration, production, processing and distribution. Major projects contribute
significantly to reshaping our portfolio and delivering our strategy.
To manage the risks associated with major project delivery, each stage of a
project’s life cycle must meet certain criteria to proceed to the next stage,
or it will be re-assessed to improve value or be discontinued. Additionally,
executive directors regularly review capital allocation at the resource
commitment meetings. In the upstream our global projects organization
focuses specifically on major projects and the risks to their delivery. We
undertake post-project evaluations to review decision-making processes,
project execution and project outcomes, and share these with other major
projects as appropriate to support continuous improvement.
For information on our major projects portfolio see page 26, and for
a recent example of how we remodel projects see Increasing value
on page 21.
Cybersecurity
The threats to the security of our digital infrastructure continue to evolve
rapidly and, like many other global organizations, our reliance on computers
and network technology is increasing. A cybersecurity breach could have a
significant impact on business operations.
We seek to manage this risk through cybersecurity standards, ongoing
monitoring of threats, testing of cyber response procedures and close
co-operation with authorities. Over the past few years our employee
campaigns on topics such as email phishing and the protection of our
information and equipment have helped to raise awareness of these issues.
Safety and operational risks
Process safety, personal safety and environmental risks
The nature of the group’s operating activities exposes us to a wide range of
significant health, safety and environmental risks such as incidents associated
with releases of hydrocarbons when drilling wells, operating facilities and
transporting hydrocarbons.
Our OMS helps us manage these risks and drive performance improvements.
It sets out the rules and principles which govern key risk management
activities such as inspection, maintenance, testing, business continuity and
crisis response planning and competency development. In addition, we
conduct our drilling activity through a global wells organization in order to
promote a consistent approach for designing, constructing and managing
wells.
For more information on safety and our OMS see page 39.
Security
Hostile acts such as terrorism or piracy could harm our people and disrupt our
operations. We monitor for emerging threats and vulnerabilities to manage our
physical and information security.
Our central security team provides guidance and support to a network of
regional security advisers who advise and conduct assurance with respect to
the management of security risks affecting our people and operations. We
also maintain disaster recovery, crisis and business continuity management
plans. We continue to monitor the situation in the Middle East and North Africa
closely.
Compliance and control risks
Ethical misconduct and legal or regulatory non-compliance
Ethical misconduct or breaches of applicable laws or regulations could
damage our reputation, adversely affect operational results and shareholder
value, and potentially affect our licence to operate.
Our code of conduct and our values and behaviours, applicable to all
employees, are central to managing this risk. Additionally, we have various
group requirements and training covering areas such as anti-bribery and
corruption, anti-money laundering, competition/anti-trust law and international
trade regulations. We seek to keep abreast of new regulations and legislation
and plan our response to them. We offer an independent confidential helpline,
OpenTalk, for employees, contractors and other third parties. Under the terms
of the US Department of Justice settlement, an ethics monitor will also review
and provide recommendations concerning BP’s ethics and compliance
programme.
Find out more about our code of conduct, our business ethics and
the ethics monitor on pages 45, 44 and 37 respectively.
Trading non-compliance
In the normal course of business, we are subject to risks around our trading
activities which could arise from shortcomings or failures in our systems, risk
management methodology, internal control processes or employees.
We have specific operating standards and control processes to manage these
risks, including guidelines specific to trading, and seek to monitor compliance
through our dedicated compliance teams. We also seek to maintain a positive
and collaborative relationship with regulators and the industry at large.
For further information see Upstream gas marketing and trading
activities on page 28, Downstream supply and trading on page 31
and Financial statements – Note 27.
★ Defined on page 252. BP Annual Report and Form 20-F 2014 47
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