Corporate Risk Management Analysis for BP Plc: A Detailed Report

This report provides an in-depth analysis of BP Plc's corporate risk management practices. It begins with an introduction to BP Plc, highlighting its operational scope and the importance of effective risk management. The report then delves into BP's risk assurance processes, examining how the company identifies, measures, and mitigates operational risks, including financial and regulatory compliance. It also explores BP's monitoring of risk, detailing the internal control systems and risk management boards that oversee risk assessment and mitigation strategies. The report further examines risk communication and culture within BP, emphasizing the importance of sharing real-time information and fostering a safety-conscious environment. It critiques BP's past failures in risk communication, particularly in the context of environmental and health challenges, and suggests improvements in communication strategies. The conclusion summarizes key findings and offers recommendations for strengthening BP's risk management framework, including enhancing internal governance, improving auditing procedures, and fostering a culture of transparency and accountability.

CORPORATE RISK
MANAGEMENT 1

TABLE OF CONTENTS
1. INTRODUCTION...............................................................................................................................3
2. RISK REVIEW.......................................................................................................................................3
BP’s Risk assurance................................................................................................................................3
BP’s monitoring of Risk..........................................................................................................................4
3. RISK COMMUNICATION AND CULTURE........................................................................................5
4. CONCLUSION.......................................................................................................................................7
REFERENCES............................................................................................................................................9

1. INTRODUCTION
BP Plc is British petroleum is United Kingdom based organization which deals in oil and
gas sector. It is one of the listed company of London, Frankurt and New York Stock Exchange.
Its market capitalization and revenue has made it sixth largest organization in industry. British
Petroleum company has wide operations in almost 70 countries which is able to produce around
3.6 million barrel per day. Organization has become able to open its 19000 service station that
has enabled it to earn more revenue. There are various internal problems that has lead to
ineffective risk management and indulged in several legal as well political issues.
Risk Management (RM) is process of analyzing and mitigating in order to derive smooth
functioning. In current era it is essential for all company to develop an effectual pattern for
monitoring risk of business environment. BP Plc failed to respond more accurately due to its low
concentration on environmental as well employment laws. Firm has not given emphasis on
planning at initial stage regarding disposal of hazardous substances, pollution control tactics,
chemical reduction, identification and evaluation of employees’ safety to decline accidents &
violation rate.
2. RISK REVIEW
BP’s Risk assurance
Risk assurance refers to the company’s accounting practices in order to continue its
operational activities with confidence through identifying & measuring prevailing risk. BP as
being one of the largest multinational organizations of oil & gas industry maintain crucial
process for risk assurance (Willumsen and et.al., 2019). In addition to this, company pay
attention on day to day assurance through quality assessment, mitigating & action plans for
significant operational threats. Incident investigation, OMS implementation, critical safety &
operation risk through developing competencies, etc are some the actions organization has taken
to maintain balance.
Its related with role of flow assurance in offshore operations of BP involves
communicating with assets teams with changing conditions. From the evaluation it can be
interpreted that focus of BP is on maximum production that reduces its capability in minimizing

risk (Samimi, 2020). Organization has implemented RM cycle to identify flow assurance,
approaches to tackle the same, etc. with respect to this, in process of assuring that the
recognizing risk BP has assessed that hydrate buildup in its pipelines is the crucial; factor that
has outcome in many mentioned challenges (Araz and et.al., 2020). It has also been given
emphasis on developing collaborative approach for understanding flow of assurance of BP to
manage risk entirely. Browtie model has been executed with perspective of implementing
effective communicational tools as it largely contribute in minimizing challenges of operations.
British Petroleum company focuses on assets and functions to promote safe, reliable and
effective operations. For deriving sustainable financial results organization adhere applicable
laws, regulations so that desirable position by avoiding issues can be obtained. Organization is
subject operational risk as treasury & commodity markets comprises complex transactions across
which makes difficult to comply with regulatory commitments. Financial losses and bad
reputations are outcome of this that can decrease its shareholders interest in investing (Karami,
Samimi and Ja'fari, 2020). The impairment charges, low level analytical reviews, control over
closing balance, etc. are taken into consideration through management of company for risk
assurance. There is risk of material misstatement which is hampering the actual evaluation of
E&A balance. Impairment assessment regarding the BP’s accounting policy that there are key
criteria which require more focus for appropriate risk assurance such as E&A future plans &
budgets, evidence of active dialogues, etc . Particular threat associated with assets & liabilities
for forecasting problems that are not included in the financial performance evaluation.
BP’s monitoring of Risk
Company takes several of actions for managing threat existing in organization so that
competitive advantages can be derived. The comprehensive internal control system & RM has
been developed by BP through applying governance principles for achieving predetermined
objectives. It becomes essential for the enterprise to look in depth manner. the risk management
board of organization pay attention on continuous & consistent evaluation on principles &
emerging risk (Ullah and et.al., 2021). From the critical evaluation it be stated that British
Petroleum Company started taking measures security assurance, geopolitical commitments, etc.
For managing all these company includes management of business segments, functions,
meetings and corporate activities. There is as well threat of managing hedge for which BP take

initiative to identifying instruments, Nature of prevailing risk, etc. in addition to this, there are
objective set for formulating policies and measures for estimating loss in case of inability to
overcome any risk. The integral procedure regarding supply & trading functions have formal
governance to for attaining deep knowledge related with the market, credit and operational,
liquidity, etc risk.
The new division in company has given responsibilities to provide assurance regarding
operational practices that they are complied with government regulations & accounting
standards. There are various courses that BP has implemented in order to make effectual way in
respect to manage & control factors impacting British Petroleum Plc. in adverse pattern. In
addition to this, oil spills are being declined through creating appropriate planning including
refineries & project exploration. There are variety of other strategies as well which needs to
taken into practice for having effectual understanding of British Petroleum company risk
monitoring (Capella and et.al., 2017). It has executed Safety & Operational Risk (S&OR) that
focuses on fully embedded deeper water horizon specific lesson’s , tone & expectations,
auditing, culture, lagging metrics, etc. Company has formulated its policy for defining, clearing
and analyzing expectations so that significant& systematic approach related with continuing
operations can be implemented. Greater visibility with stronger governance main motive of risk
management of BP. Enhanced metrics to derive systematic management & operating
effectiveness are given importance (Risk Management, 2021). Strategic framework has been
executed in BP which is enduring the principles of deep capabilities & safety operating cultures
that concentrates on leadership, organizational culture, risk assessment , systematic operating and
checking & marinating balances.
3. RISK COMMUNICATION AND CULTURE
Risk Communication (RC) is important to taken into practice as it helps to share real time
information, suggestions, etc among the people facing threats to health, economic issues. In
addition to this, reason behind RC is to make stakeholders capable of taking informed decisions
in safeguard of their interest (Abuse, 2020). Communication should be in quantitative, objective
and systematic manner so that relevant and reliable decisions can be formed. BP conducts its
operation in gas and oil industry that severs various challenges to environment as well health of
society. There is bad communication & management of risk which the main reason blamed by

official authorities for oil disaster in the gulf. For this company ahs prevent itself and showed its
limitation of communicating unless there is scale of the blowout. The risk communication
ensures that there is adequate information provided to develop understanding of relevant issues.
There are various different laws that are enacted for making companies like BP liable to
sufficient planning and community to right to know about environmental practices.
The previous implemented procedure for communication essential information as
according to traditional model which was following normal threat plan. British Petroleum
Company has ensured that it provides sufficient data to support buildup of material, equipment
and people. The issue regarding the spill in gulf is one of the most challenging situations which
have questioned company’s risk communicating strategy that has forced it to show results. The
new communicating model has been after that to make continuous flow of essential data so that
environmental & health standards can be achieved through delivering critical information for
strategic planning. Identification tracking allows operations evolve with planning to operate in
difficult situations so that offering positioning information than hierarchical methods becomes
possible. Company’s culture is found to be toxic as well chronic due to accidents over the past
years. Company’s culture is non integrating that requires improvement for making the
appropriate risk communicating model in effectual form.
The culture of safety has never embraced at British Petroleum Company. It validate that
BP was never planned to deal with crises situations so that reduction of disposal, accidents, etc
can be tackled in positive manner. BP’s management communicating strategy should includes
safety procedure, policies, objectivities , crises data sharing strategy (Arena and Julio, 2021).
The failure of RM in BP can be supported by expressing the empathy to accidents and
stakeholders. British Petroleum Company was never prompt , accurate and consistent in
responding reading accidents which has highly influenced the BP’s image in industry in adverse
manner. It has always show ineffective response for the victims which has made its reputation
and charges regarding corporate social responsibility are levied. Poor RC results in negative
stakeholders relationship which impacted company’s financial growth and credibility in the
sector. Lack of environmental disclosure & stakeholders relationship was improved by adopting
suitable approaches to make it improved (Navarro and Sutton, 2021). British Petroleum
Company has took initiate to provide information about its culture which comprises policies,

procedures, performance and plans. Being an multinational organization it becomes important
for the firm to have collaboration with media to deliver quick response and decisions taken in
favor of investors, employees, etc. to obtain positive influence on reputation. Having honest and
open communication with media enable firm to share accurate details of company steps with
concerned party as it is main source for publishing crucial data to maintain stability in sector
(Intrieri and et.al., 2020). BP’s RC was lacking this feature in previous time but after facing
many challenges organization has taken action to achieve this specified feature.
BP’s communication strategy was lacking of truthfulness and honesty as its
environmental strategy was perceived to be green washing that affects both health & safety of
concerned people. In order to make improvements in culture the organization has created training
programs for deploying technologies advancement in order to make working scenarios
strengthened to provide protections (Bi and et.al., 2021). Its culture as well included the
operation management system to make clear functional responsibilities to provide positive
working scenarios in organization. Strong safety culture with to promote speak up culture over
toxic working environment has been recently improved. Its culture is found to be human and non
hierarchical. In current time, an effective communication pattern for delivering sufficient and
crucial information to society so that legal and criminal obligations can be avoided.
4. CONCLUSION
From the above report it can be concluded that risk management is one of the crucial
component for achieving continuous growth in sector. BP Plc has been failed to comply with
environmental and human safety regulation which largely impacted its reputation in the industry.
Result of all this impacted British Petroleum company in adverse manner as it has faced
challenges like civil & criminal obligations due to market manipulation regarding sanction &
investigations. Company could have managed it effectively if it has focused on following areas.
It is advisable to adopt the risk management standards according to internal governance so that
better evaluation and aggregation become possible. To develop a systematic risk evaluating
technique firm should implement independent or non executive directors committee to obtain
non bias perspective for recognizing potential impact on company so that enterprise take
suitable actions. Internal audit committee to make assessment of actions for measuring the
performance of selected approaches in respect to make improvements. Strengthening auditing

procedure for being able to overcome deficiencies of information for safeguarding organization
for neglecting legal and accounting obligations. There should be more effective and suitable
educational processes to improve skills, knowledge and competencies of BP’s personnel. In
addition to this, it is advisable to company to develop greater oversights for current prices in turn
well monitoring can be attained to have significant financial position in sector. It is suggested to
company to have expertise governance committee to get advice and support in identifying and
monitoring all functional areas risk. Strategies of RM is basically related with five actions such
as mitigating, avoidance, acceptance, transferable and exploitation. Getting appropriate
evaluation and interpretation aid BP in making decision regarding implementation of any of the
five strategies to achieve positive outcome as per the internal governance.

REFERENCES
Books and Journals
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Araz, O. M. and et.al., 2020. Data analytics for operational risk management. Decision Sciences.
51(6). pp.1316-1319.
Arena, M. P. and Julio, B., 2021. Litigation Risk Management Through Corporate Payout
Policy. Journal of Financial and Quantitative Analysis, forthcoming.
Bi, Z.M and et.al., 2021. Safety assurance mechanisms of collaborative robotic systems in
manufacturing. Robotics and Computer-Integrated Manufacturing. 67.
p.102022.
Capella, M. and et.al., 2017. Mission Assurance Framework for Small Satellite Missions.
Intrieri, E and et.al., 2020. Operational framework for flood risk communication. International
journal of disaster risk reduction. 46. p.101510.
Karami, M., Samimi, A. and Ja'fari, M., 2020. Necessity to Study of Risk Management in Oil
and Gas Industries (Case Study: Oil Projects). Progress in Chemical and
Biochemical Research. pp.239-243.
Navarro, P. and Sutton, S. G., 2021. Investors’ Judgment and Decisions after a Cybersecurity
Breach: Understanding the Value Relevance of Cybersecurity Risk
Management Assurance. Available at SSRN 3817763.
Samimi, A., 2020. Risk Management in Oil and Gas Refineries. Progress in Chemical and
Biochemical Research. 3(2). pp.140-146.
Ullah, F. and et.al., 2021. Risk management in sustainable smart cities governance: A TOE
framework. Technological Forecasting and Social Change. 167.
p.120743.
Willumsen, P. and et.al., 2019. Value creation through project risk management. International
Journal of Project Management. 37(5). pp.731-749.
Online
Risk Management. 2021. [Online]. Availble through: <
https://searchcompliance.techtarget.com/definition/risk-
management#:~:text=Risk%20management%20is%20the
%20process,errors%2C%20accidents%20and%20natural%20disasters. >