Risk Management System
The Company has developed and formalised a unified approach to risk management within the framework of an Integrated Risk Management System(IRMS). The IRMS at Gazprom Neft is a continuous, systematic process designed to identify, assess and manage risks.
The key approach of the Company’s IRMS is the distribution of powers by management level within the Company depending on the financial impact of the risk.
In late 2011, the Company introduced basic IRMS processes at most of its existing subsidiaries and affiliates. This made it possible to compile a detailed Corporate Risk Map for 2011 by consolidating the risk events from the level of individual subsidiaries and affiliates to the Company level as a whole. In
This approach has made it possible to form zones of responsibility for risk management and monitor risks at all levels of the Company’s management as well as to ensure the preparation of targeted response plans to substantial risks both subsidiaries and affiliates as well as at Gazprom Neft assets as a whole.
The regulatory and methodological framework of the Gazprom Neft IRMS includes the following documents:
- a Risk Management Policy
- a Company Standard Integrated Risk Management System with procedures for identifying and assessing risks, preparing risk management measures and monitoring their fulfilment
- methodological guidelines for the risk management process, including templates of the Risk Register, Risk Card and Risk Matrix.
The Company continuously updates and improves its approach to basic processes of the IRMS, including devoting special attention to improving the approach to risk assessment and the integration of the risk management process into such key processes as business planning, project management and M&A.
To improve the efficiency of IRMS processes in 2014, Gazprom Neft continued its activity on a project launched in 2013 to automate the IRMS. The first stage of the project was completed in late 2013 and made it possible to establish and put into commercial operation a unified Company risk database. Over the course of 2014, the database was completed with relevant information, users were trained and reporting formats were developed for Company executives.
Risk management constitutes an integral part of the internal environment of OJSC GAZPROM NEFT and includes:
- introducing a risk-management approach to all aspects of production and management activities
- conducting systematic analysis of identified risks
- building a system to control risks and monitor the effectiveness of risk management activities
- an understanding by all Company employees of the basic principles and approaches to risk management accepted at the Company
- providing neccessary regulatory and methodological support
- allocating powers and responsibilities for risk management among the Company’s structural divisions
Goal of risk management
The Company’s goal in risk management is to improve the efficiency of management decisions by analysing related risks as well as ensuring the maximum effectiveness of risk management measures during the implementation of the adopted decisions.
This goal is achieved by performing the following tasks:
- establishing a risk management culture within the Company to realize a common understanding among management and employees concerning the main principles and approaches to risk management
- establishing and introducing a systematic approach to identifying and assessing risks that are inherent in the Company’s activities both as a whole and in individual areas of activity
- stimulating the exchange of information on risks between the Company’s structural divisions and the joint development of risk management actions
- providing systematic information about risks to the Company’s governing bodies
KEY STAGES OF IRMS INTRODUCTION
The introduction of the Integrated Risk Management System at Gazprom Neft began in August 2008 with the approval of the IRMS Introduction Concept by the Management Board.
Levels of financial impact of risk and distribution of powers within the IRMS
|KEY RISKS||The Management Board adopts key decisions and assesses management. Units directly manage this risk category.|
|RISKS OF UNITS||Management and monitoring at the Unit level|
|RISKS OF S&A||Management and monitoring at the subsidiary and affiliate level|
Integration of IRMS with business planning and project management
Risk assessment became an integral component of business planning in the reporting year. One of the main differences in the business plans for
As part of integrating risk management with the Company’s project management processes, above all in major projects related to exploration and production, the methodological framework for the analysis of project risks developed in 2013 was introduced on a full-scale basis in 2014. At the same time, a number of risk sessions were held to identify risks related to the management of the Company’s major projects. This made it possible to prepare project plans, primarily calendar schedules, that are more balanced in terms of the correlation between the goals set and the level of uncertainty.