ABCEng Board of Directors: Risk, HSE, and Legislation Briefing

This report is a comprehensive briefing to the ABCEng Board of Directors, addressing critical aspects of risk management, Health, Safety, and Environment (HSE) management, relevant legislation, and the responsibilities of the board members. It analyzes the risks associated with gas production, including equipment failure, hazardous chemical releases, and competition from alternative energy sources. The report highlights the strengths and weaknesses of ABCEng, emphasizing the importance of a strong safety culture and the consequences of inadequate information. It also discusses opportunities for the company, such as auxiliary resources and partnerships, while acknowledging threats like managerial diseconomies and economic challenges. The report outlines key legislation, legal requirements, and the role of managers in ensuring the company's success. It further examines the consequences of being poorly informed, including risk aversion and employee dissatisfaction. Finally, the report concludes with a PESTL analysis of the challenges ABCEng faces in a new venture, considering political, economic, legal, and technological factors. The report underscores the need for proactive risk management strategies and adherence to safety regulations to ensure the company's long-term success.

QUESTION ONE
BRIEFING TO THE BOARD OF DIRECTORS ON RISK, HSE MANAGEMENT, LEGISLATION AND
RESPONSIBILITIES
Introduction
The upsurge of firms in the energy sector has compelled several companies to focus on modalities to increase
profit margin at the expense of safety of the business and the human resources. An organization that fails to
comply with what peers are doing in the industry is bound to fail as a result of the stiff competition resulting
from globalization. A gas company faces several challenges including marine perils-severe storms,
interruptions by government agencies- due to health, safety and other regulatory provisions (Peck, Jackson
and Mulvey, 2018)
According to Stephens (2017), it was at the wake of stringent measures on management and organizations
that health and safety and manslaughter issues were addressed as key performance indicators in both small
and large firms. The consequences of failure to comply with the risk management provisions have become so
severe that firms would rather forfeit investing than fall in the wrong side of the law enforcement agencies. It
is for this reason that firms invests heavily in training its managers to equip them with the necessary skills for
effective management of resources.
The purpose of this briefing is to inform all board directors of the strength, weaknesses and challenges
affecting the ABCEng Company regarding health and safety requirements as well as their roles and
responsibilities as far as implementation of the HSE regulations. In addition, it also covers the consequences
of absence of information on the part of senior managers and directors. The last section of the paper contains
a concise overview of the challenges that the company is likely going to face while operating in the new
field.

Risks associated with gas production
Availability of deposits depend on probability
Exploration of oil is based on speculative risks and investors may encounter dry holes or presence of limited
quantities of commercial hydrocarbons in the underground tunnels. The marginal cost of drilling the wells
may be well above the returns on capital invested. In the tunnels, there is frequent equipment failure leading
to unsuccessful operations or loss of life and absolutely no gain.
Release of hazardous chemicals
Gas well release sulfide substances exposing workers to hydrogen-sulfide gas that is poisonous and can
cause serious concerns in their lives. The company will incur additional costs to monitor and neutralize the
poisonous gases within the wells and train employees in mitigation procedures.
Availability of alternative sources of energy
It is believed that other sources of energy such as the solar energy and coal fuels are more economical than
gas energy. In addition, these new developments in the energy sector have proved to be more eco-friendly
that hydrocarbons making them to be preferred over gas fuels. Investing in gas production will make
ABCEng Company to look out-fashioned and an enemy to global progress in fight against greenhouse effect.
Challenges imposed by national and regional trading blocks
The company risks facing the national and international regulations implemented to minimize emission of
poisonous gases to the atmosphere. It will therefore incur higher costs of compliance-such as high taxation to
ensure that the products do not spill to the environment and this may end up reducing the firm’s chances of
applying sophisticated equipment resulting in to reduced profit margin for the organization.

Prevailing circumstances in the company
Strengths of the ABCEng Company
One of the key areas where the organization has excelled is on mechanization of processes. Most of the
production phases have been automated to reduce the cost of hiring labour. Reduction of the cost of
production ensures high returns on investment (Yi, Zhang and Guo, 2018) (see slide 4). The decision to
venture into a different line of production is a wise move as it will ensure consistency in the supply of a vital
ingredient for the firm’s products. The company has a proper guideline for conducting guidance pipework
inspection and this has enabled it to monitor the performance of the caisson through the current life of field.
Weaknesses of ABCEng Company
The main challenge facing the firm is director’s failure to acknowledge the significance of complying with
health and safety requirements (see slide 7). The organization, particularly the directors in the UK-based
subsidiary have not inculcated a culture of safety a part of individual and group values as a guiding principle
in the firm. In accordance with Buchbinder, Shanks and Kite, (2019), an organization succeeds in
implementing health and safety regulations when managers and directors have a shared perception of their
organization’s approach to staff safety. It is therefore a requirement by all stakeholders to take action to
ensure prevention of workplace injuries for improved performance. As indicated in slide 7, there are several
issues that managers need to put into consideration to monitor and stay informed in terms of health and
safety concerns.
Opportunities available for ABCEng Company
Availability of auxiliary resources: The organization has an opportunity to supply the facility with energy
from its own sources when the new venture goes through. As recommended by Revilla, and Saenz (2017),
one of the best ways to reduce the cost of operations in firms is to have control over the supply of resources
and intermediate goods in the industry. The business is also located in a business-friendly environment (see

slide 5 in the appendix). It is also possible for ABCEng Company to find partners for sustainable relationship
for efficient production of gas and related products, for instance, there is a company operating the gas
processing facility for the organization.
Threats that make ABCEng Company to struggle in achieving its goals
Venturing into a new area of production means increasing the scale of production and this often come with
managerial diseconomies of scale and increase in the cost of production, (see slide 9). ABCEng Company
will divert a lot of resources to the new venture and remain with little funds for the main line of production.
Similarly, the region that had been known as an economic giant, a safe haven for investment is facing the
consequences of the Brexit experience. In terms of employee safety, workers might be exposed to the danger
of respirable crystalline silica while using hydraulic equipment. In addition, the well-site workers also face
the danger of being exposed to extreme temperatures that may affect their lives.
Relevant legislation and legal requirement for the ABCEng Company to operate
Every country enacts and maintains a unique set of rules that provide boundaries and scope of actions for
behavious of the key players in any industry (Rogers et al., 2017). As seen in slide 8, energy industry in the
United Kingdom has several rules that guide players and the extent of their actions in the market. The laws
have changed the organizations’ focus from merely profit oriented to consideration of the impact of decisions
on people. In the modern society, firms compete on human resources based on the work environment rather
than purely on remuneration. Employees have become so concerned about their welfare that their
aggressiveness towards health and safety requirement is a mandatory provision for risky ventures
(Acheampong, and Akumperigya, 2018).
Examples of legislations include:
The National Institute for Occupational Safety and Health (NIOSH) Workplace Safety & Health provisions
The Occupational noise exposure 1910.95. Note: 1910.95(o)

Worker Exposure to Silica during Hydraulic Fracturing. OSHA-NIOSH Hazard Alert, (2012)
Protecting Workers from Heat Illness. OSHA-NIOSH InfoSheet (Publication 3438), (2011)
Protecting Workers from Heat Stress. OSHA QuickCard™ (Publication 3154)
Nuclear Regulatory Commission 10 CFR 39
Hydrogen Sulfide (H2S). OSHA QuickCard™ (Publication 3267)
Gases and vapors continue to pose hazards on oil and gas well sites during gauging, fluid transfer, and disposal.
National Institute for Occupational Safety and Health (NIOSH) Science Blog, (August 24, 2018)
Eye and face protection 1910.133
Key questions that managers need to ventilate upon to make ABCEng Company successful
What is the nature of safety culture needed for the firm’s success?
What are the key components of safety culture in an organization?
How can the organization improve the safety of employees and business simultaneously?
What is the role of managers in adopting and implementing safety culture?
Consequences of being poorly informed by managers of an organization
The primary objective of timely and quality information is to prevent managers from acting under false
belief (Dagonneau, 2017) (see slide 14). Misinformation regarding risk management comes in two
categories. The first face come from self-interest bias where managers only advocate for issues affecting
their wellbeing and ignore what affects the organization and subordinates. The face come from belief in
complacence where managers believe that what goes on in the organization is the best and do not consider
what other firms are doing to improve the welfare on their staff. This culture however has dire consequences

on the performance of the organization and requires proactive management strategies to subdue before they
escalate to uncontrollable levels. The following are some of the consequences of being poorly informed:
It makes managers to act without considering risk-aversion needs of the firm. Poorly informed managers are
oblivious of the merits of health and safety measures for an organization and only see them as avenues for
spending the company resources. Such managers are incapable of computing the marginal cost of risk
management expenses and the marginal benefits associated with such practices (Auad, 2018).
Another consequence of poor information is high level of nomadism of employees. That is, the firm will
realize high rate of employee exit since employees are rational beings who search information and will know
what their counterparts are enjoying in other firms (Markard, 2017, Urban, and George, 2018). Employees in
such organizations will feel undervalued and that the management does not recognize their contribution in
the success story of the firm.
Poor information limits the managers’ ability to communicate effectively with their subjects. The massage
passed to employees results into limited payoff as an eminent disconnects looms between the management
and employees. The focus of directors turns from profit generation to conflict resolution between
management and staff. In other words, poor information leads to establishment of non-conducive work
environment (DeFries, and Nagendra, 2017).
Challenges of investing in the new venture by ABCEng Company examined through pestl analysis
Investing in a new business deal often suffer from limited real-time information about the market in terms of
demand, seasonality in production and competition (Kaplan, and Lerner, 2016, Senobari, and Jafarzadeh,
2017).
Political risks
Operating in a country with a history of political good will encourages production of gas and related products
while a region with unfavorable political outfit reduces the chances of establishing business in the industry.

In addition, evidence of political instability is a sure sign that the business will not do well as there will be
insecurity in the country. Government policies regarding investment in an area has great impact on the
business as unfavorable rules make the process of investing difficult and non-rewarding. The policies also
dictate the probability of finding the market for disposing the surplus products after the company demands
are met.
Economic risks
An economically feasible business requires that the total cost of operation is below the benefits obtained
from the product as well as its by-product. In addition, installation requires large capital outlay making it
difficult to shut down due to financial crises. The price at which the product will be sold is a critical
consideration as it dictates the decision as to produce or source from other traders. Given the rampant price
fluctuation in the country, ABCEng must monitor and evaluate the trends before diverting funds to the
project. The economy determines the market price and quantity of the product produced and supplied. Lower
costs of equipment and other implements make production cheaper hence higher returns on investment while
higher equipment results into lower profit margins hence discouraging investment. After investing huge
sums of money in the project, if the wells fail to produce economic quantities of gas, the project will be a
white elephant.
Legal risks
Gas and related products are governed by strict laws and regulations making it a very volatile product. The
company must understand the rules of business as far country’s legislations are concerned. Operating in the
UK comes with several challenges, most of which are of legal and compliance origin. The laws constantly
change in accordance with the demand circumstances as well as changes pioneered by employees in the
industry. The firm must factor in the cost and time for obtaining license and permits to operate in the
country. Moreover, the size of ABCEng Company makes it easy to take part in favorable contractual deals as
specified in the country’s legislation. .

Technological risks
The methods of production adopted by the organization determine its performance with reference to its peers
in the industry. The Company must be informed of the most current technological advancements to avoid the
use of obsolete methods of production hence achieve the goals of efficiency. However, the company must be
aware of the national legislation that dictates the scope and nature of exploratory equipment that can be used
within the state. This has the effect of barring firms from using modern equipment that would enable them
reach places that had previously been inaccessible.
Recommendation
ABCEng Company should conduct thorough research to ascertain the consequences of venturing into the
new areas of expertise. Similarly, the management should put in place all the necessary measures to
guarantee security of employees in the new sector. This can be achieved if all managers develop similar
approach to health and safety practices as outlined in the organization’s long-term goals.
Conclusion
The benefits of information and measures put in place to ensure security of employees and the business
justifies the cost incurred when the latter is appropriated properly. The need for providing safe working
environments has become so important governments now view it as a necessary condition before licensing
businesses. Employees have also become actively involved in fighting for their rights and have enough tools
at their disposal to take action against complacent employers. Given that each country has policy guideline
regulating the scope of conducting business within its territory, an organization must strive to comply with
the norms to succeed in its operations.

ABCEng GAS INTEGRATED COMPANY
NOTICE OF BOARD MEETING
FROM THE HSE MANAGER,
ABCEng COMPANY
TO ALL ABCEng DIRECTORS
There will be an all directors meeting on 22nd January, 2020 at the company boardroom from 9:00 am.
The following agenda items will be discussed in the meeting
1. Discussion of the probable risks, opportunities and threats that the organization is likely to encounter
in the process of service delivery. Every manager will be given an opportunity to contribute his or her
views about the current situation of the company and the likely prospects that can be achieved in the
long-run.
2. Discussion of the roles of managers and directors as far as risk management and health and safety
issues are concerned. Each director is expected to research the common regulations regarding health
and safety requirements in the region where the firm is located. This information can be obtained
from the official company website.
3. Evaluation of the challenges that the organization is likely to face in a bid to venture into a new scope
of production. Pestel analysis will be conducted to ascertain the viability of the venture as it is a new
field to the organization but requires large capital outlay.
4. Selection of the date for training of directors on risk management best practices. The directors to
decide on the industry expert who will facilitate the training process since the same will be
outsourced. The dates and venue will be selected using the input of all stakeholders since it will be
compulsory for all directors.

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