up
MD&A / Risk Management / Risk Management System

The Company has developed and formalized a uniform approach to handling risk-management processes, which is fully contained in the ‘Integrated Risk Management System’ (IRMS) corporate standard.

Gazprom Neft's IRMS is a systematic continuous process that identifies, assesses and manages risks.

Its key principle is that responsibility for the management of various risks is assigned to various management levels depending on the expected financial impact of the specific risks.

As of late 2011, the Company had implemented basic IRMS processes at most of its major subsidiaries and affiliates, and was thus able to develop a detailed corporate risk map for 2011 by consolidating risk events from individual subsidiary and affiliate levels to the entire Company.

In 2012, the scope of the IRMS was extended as the portfolio grew, with 11 new assets in the Exploration and Production Segment (EPS) and 4 assets added to the Logistics, Refinement and Sales Segment (LRSS).

This approach made it possible to outline responsibility areas for risk management and monitoring at every level of corporate management, and to have customised response plans to address material risks at each subsidiary/affiliate and throughout the Company.

Risk-related hierarchical structures for the key EPS business areas (production, industrial safety, procurement, projects) have been developed along the same lines for the LRSS key business areas (refinement, sales). This approach enables consistency in the regular re-evaluation of risks, and analysis of root risk factors that impact the achievement of financial targets.

In 2012, the IRMS legal and methodological framework was completely updated with newly developed and implemented tools:

  • Risk management policy;
  • The corporate standard ‘Integrated Risk Management System. Procedure for identifying and assessing risks, preparing responses, and monitoring compliance'; and
  • Guidelines for the risk management process, including the Risk Registry, Card and Matrix templates.

The Company continuously works to improve its approach to the basic IRMS processes with particular emphasis on efforts to assess risks and integrate risk management processes into key corporate processes such as business planning, project management and M&A.

RISK MANAGEMENT HAS BECOME AN INTEGRAL PART OF THE CORPORATE ENVIRONMENT OF GAZPROM NEFT, BY VIRTUE OF THE FOLLOWING PROCESSES:
  • Implementing a risk-oriented approach in all aspects of production and management;
  • Undertaking systematic analysis of identified risks;
  • Building a system to control risks and monitor the efficiency of risk-management activities;
  • Making all employees aware of Gazprom Neft’s basic principles and approaches to risk management;
  • Ensuring the required regulatory and methodological support; and
  • Distributing authority and responsibility for risk management between the Company’s business units.
RISK MANAGEMENT OBJECTIVES Gazprom Neft has a Risk Management Policy that defines the goals and principles of risk management in order to make the Company’s business more secure in both the short and the long term. The Company’s goal in risk management is to ensure that Gazprom Neft can achieve its strategic goals, as far as possible, by identifying and guarding against risks, and by putting effective mechanisms in place to deal with them. Gazprom Neft’s risk management system ensures the smooth operation of the Company’s production and business processes by anticipating threats and mitigating the impact of adverse external and internal factors.

KEY IRMS DEPLOYMENT STAGES

IMPLEMENTATION OF THE INTEGRATED RISK MANAGEMENT SYSTEM AT GAZPROM NEFT BEGAN IN AUGUST 2008, WHEN THE COMPANY’S MANAGEMENT BOARD APPROVED THE CONCEPT

2008–2010 2011–2012

2013–2014 (targets)

  • Developed the IRMS implementation concept and received the Management Board’s approval.
  • Introduced a new corporate standard, ‘IRMS: Procedure for identifying and assessing risks, preparing responses, and monitoring compliance.’
  • Expanded the scope of the IRMS to cover 29 business entities (20 subsidiaries and affiliates, and 9 sub-divisions of the corporate center).
  • Expanded the scope of the IRMS – subsidiaries and affiliates, joint ventures and major projects. Arranged risk management procedures for major projects.
  • Introduced risk-oriented planning for internal audit.
  • Commenced integration of the risk management system into the business planning process – systematized information on risks and activities considered during the business planning process.
  • Analyzed the IRMS to ascertain its compliance with best international practices (Ernst & Young). The development of the IRMS was recognized as compliant with the best trends. Integrated IRMS processes into executive decision-making procedures, a distinctive feature of the current stage of corporate development.

Continued integration of the IRMS into business planning process, including:

  • improved methods for quantitative risk assessment;
  • improved risk analysis methods in the course of designing and revising integrated plans for field development; and
  • IRMS integration with objective-related management (justifying target performance, taking account of risk assessment).

Continued integration of risk management procedures into operational management. Developing an IT system to support IRMS processes

FINANCIAL IMPACT LEVELS OF RISK AND DISTRIBUTION OF AUTHORITY WITHIN IRMS

The Managemant Board is respnsible for key
decisions and assesment of risk management.
The immediate control of this risk category is
carried out by business blocks
Risk management and monitoring at the business
block levels
Risk management and monitoring at the subsidiary
and affiliate level
MANAGEMENT BOARD
BLOCK
BLOCK
SUBSIDIARIES
AND AFFILIATES
SUBSIDIARIES
AND AFFILIATES
SUBSIDIARIES
AND AFFILIATES
SUBSIDIARIES
AND AFFILIATES

IRMS PROCESS FLOW CHART AT GAZPROM NEFT GROUP

RISK DETECTION/
REVIEW ANNYALLY
QUALITATIVE
QUANTITATIVE RISK
ASSESSMENT ANNYALLY
DESIGNING RISK
CONTROL ACTIVITIES ANNYALLY
ACTION MONITORING EVERY QUARTER/HALF-YEAR/
YEAR*
* Depending on the severity of risks.

Integration of the IRMS into the business planing process

In the course of 2012, risk assessment became an integral part of the business planning process. EPS- and LRSS-related business plans for 2013 to 2015 are, therefore, distinguished by a more detailed approach to risk assessment.

The existing assessment and description of risk factors has been revised at the subsidiary and affiliate level taking changing conditions and new plans into account.

Information on the key risks facing subsidiaries, affiliates and business blocks, as well as risk mitigation measures, have been incorporated in the respective business plans.

TOOLS:

Compared to 2011
Add to «My report»
My Report (empty)
Print this Page
Download in PDF
Share this page
  • SEND LINK BY E-MAIL


    Your name*

    Your e-mail*

    E-mail recipient*

    Comment

    Type the word on the picture

    Send
    *required fields
Interactive analysis
Gazprom Neft on the map
Feedback