Risk Management

Our management system includes practices and tools aligned with how we make business decisions to ensure the consistent global identification and assessment of stakeholder-related risks.

Assessing Risks

We understand that effectively engaging with our stakeholders can reduce social risks that may lead to delays or disruptions to our activities. Our stakeholder identification process is a key component of social risk assessment. Each business unit is responsible for identifying stakeholders to under­stand their perspectives and concerns. The relationships of stakeholders and their priorities are considered to identify any potential points of collabora­tion or conflict. We then prioritize key stakeholders and develop an engagement plan to address concerns and maintain our focus on developing mutually beneficial relationships. By having open dialogue, we identify and address the potential impacts associated with our operations. Social risks for operated assets are assessed annually at the business unit or development-area level and plotted onto a risk matrix. The time horizons considered are short-term (zero to five years), mid-term (five to 10 years) and long-term (10 to 25 years). Priority risks which could affect business activities and performance for our operated assets, as determined by likelihood and consequence on the matrix, are included in the corporate SD Risk Register. Our corporate Stakeholder Engagement Action Plan addresses these risks, and provides information about the accountable action owner, milestones and target completion date. Our governance structure provides board and management oversight of our risk processes and ensures that appropriate mitigation plans are in place. Priority risks are communicated to the executive leadership champions for stakeholder engagement and human rights and the Public Policy Committee of the board of directors.

Risk Register and Action Plan

The 2018 Risk Register includes four broad social categories: local intervention, cumulative impacts to communities, local content/hiring expectations and regulatory challenges. A corporate Stakeholder Engagement Action Plan tracks the mitigation actions and progress in managing these risks. Mitigation actions can range from one or multiyear specific projects to routine and long-term programs. Risks can apply to a single business unit, to multiple business units or globally. Each business unit manages its own social risks, regulatory requirements and business unit priorities, enabling tailored, region-specific business goals to address unique challenges and opportunities. The table below provides a summary of our 2018 SD Risk Register.

Risks 2018 Actions and Milestones
Local Intervention
Opposition from community members or organizations
  • Conduct stakeholder engagement early in exploration program.
  • Execute Stakeholder Engagement Plans.
  • Negotiate agreements with indigenous communities.
  • Identify opportunities to collaborate with environmental organizations.
Cumulative Impacts to Community
Impacts to community from activities of multiple operating companies
  • Conduct traditional land use studies and incorporate findings in to development plans.
  • Participate in regional environmental impact studies.
  • Address cumulative impacts in agreements with indigenous communities.
  • Coordinate social investments with other operators.
Local Content/Hiring Expectations
Meeting local content requirements or expectations of government and community
  • Execute targeted procurement.
  • Implement training and employment programs.
  • Address local content/hiring in engagement with government representatives and community members.
Regulatory Challenges
Delays from extended approval processes; business impacts from restrictive policies
  • Maintain regular engagement with regulatory officials to provide updates.
  • Execute regulatory advocacy to address export restrictions.
 
The action plan is regularly reviewed by the Stakeholder Engagement/Human Rights Issues Working Group with the objective of sharing social risk learnings across the company. Emerging risks and challenges, other business unit priorities and regulatory requirements are also discussed. The group’s members are stakeholder engagement professionals and managers representative of our global exploration and production portfolio. 

Social Performance Metrics

Effective stakeholder engagement is critical to meeting our sustainability commitment and managing social risks. In 2019, we are tracking the implementation of our stakeholder engagement processes through the following indicators.

Process Indicator
Assessment and Planning
  • Percentage of assets that incorporate community/social issues in risk assessment processes.
  • Percentage of assets that have conducted stakeholder identification and developed and updated stakeholder engagement plans.  
Engagement
  • Percentage of key individual stakeholders or stakeholder groups (as identified through stakeholder identification) participating in planned engagements.
Addressing Community Concerns
  • Percentage of assets that have a grievance/complaint mechanism in place.
  • Percentage of specific community concerns identified through the grievance/complaint mechanism or community engagement that were addressed through mitigation actions or operational practices/processes.
Indigenous Peoples Engagement
  • Percentage of key individual indigenous stakeholders or indigenous stakeholder groups (as identified through stakeholder identification) participating in planned engagement.

We will publish the data on our 2019 performance in 2020 and update the results on an annual basis.