Risk management is an integral part of all business activities of Seplat. The Company’s risk management policy is focused on the early identification of risks and future risks that are central to achieving its strategy, annual business plan and objectives, their possible impact on the business and measures that can be implemented to mitigate the identified risks so that Seplat can continue to operate safely and effectively. At the same time, the company continually maps out its response and plans should events go wrong and learnings from past incidence reviews. Seplat recognises that risk management is a continuous journey of improvement and not a destination and will continue to develop its risk management processes to ensure that the Company is fully equipped to deal with the constantly evolving operating and business environment of the upstream oil and gas industry.
Roles and responsibilities
The Board of Directors is responsible for setting the overall risk management strategy of the Company and the determination of what level of risk is acceptable for Seplat to bear. The HSSE and Risk Committee assists the Board of Directors and has oversight of the Company’s risk management framework, profile and the risk/reward strategy as determined by the Board. The Risk Management and HSSE Committee includes two Independent Non-Executive Directors and the Chairman of the Committee, with the CEO, COO and CFO in attendance. The head of the Company’s internal audit unit may attend the meetings of the Committee. Specialists with appropriate technical expertise may also be invited to attend meetings of the Committee when necessary. The Committee meets at least four times each year when it analyses and evaluates Seplat’s total risk exposure and ways to streamline processes throughout the business to promote a unified and standardised approach to risk management.
Reports on the Company’s risk exposure and reviews of its risk management are compiled and presented to the Company’s senior management and Board of Directors. The main risk factors identified in this risk review and reporting process then become the main focus of the Committee over the coming year. For internal control purposes the Company has policies and procedures in place that aim to improve internal business processes and strengthen control systems across the Company. The Company has an internal audit unit that undertakes periodic audits of the various business units including the Company’s corporate governance systems and risk management processes.
Cross functional dependencies exist with the Finance Committee, which also monitors the controls and activities to mitigate identified financial risks. The Board also focuses on risk management in discharging its role over strategic matters and oversight over key business activities. These include approving the Company’s annual budget and five-year business plan and potential risk to the achievement of the plan and defining key operational and non-operational targets in monitoring business performance and growth.
Key principles that underpin risk management within Seplat
- Strong focus on safety throughout the organisation
- Close oversight by senior management in day to day business operations
- “Risk owners” throughout the business
- Accountability of staff and/or key personnel
- Regular and timely reporting
- Monitoring and independent reviews
- Clear system of internal controls
Main initiatives in 2015
Our 2015 focus centred on analyzing and evaluating the various key risk exposures for the Company, evaluating proposed mitigation strategies and plans. Specifically we focused on:
- Mitigating strategies to key risks; including but not limited to current low oil price and associated volatility, crude oil evacuation routes;
- Reviewing the risk management systems implementation and deployment of the risk dashboard and enhanced assessment tables;
- Reviewing strategies and action plans developed in response to issues identified and HSSE performance on industry benchmark scorecards;
- Identifying operational risk matters in relation to the Company’s field infrastructures; and
- Reviewing the operations of the whistle blowing system to obtain assurance about its effectiveness within the organisation.
Find out more about how we manage risk in our online Annual Report.