BP Annual Report and Form 20-F 2011 - Company Reporting

Our management of riskIn detailFor more informationon OMS, see Safety.Page 65Safety and operational riskThe nature of the group’s operations exposes us to a wide range of significanthealth, safety and environmental risks such as incidents associated with thedrilling of wells, operation of facilities, transportation of hydrocarbons and productquality. In addressing these risks we seek to apply our operating managementsystem (OMS) including group and engineering technical practices as applicable.We seek to conduct maintenance and equipment testing and to apply productquality control and testing procedures. We also provide our staff with training andcompetency development. To better manage the risks inherent in drilling wellswhere we are the operator, we conduct activity through a global wells organizationthat is accountable for systems and processes for designing, constructing andmanaging wells. See Safety on page 66 for information on the recommendationsof BP’s internal investigation into the Deepwater Horizon oil spill and the actionswe are pursuing to address them.Security threats require continuous oversight and control as hostileactions against our staff, our activities and our digital infrastructure (cybersecurity) could cause harm to people and could disrupt our operations. We haveprocedures that are intended to monitor for threats and vulnerabilities. We alsomaintain business continuity plans.Crisis-management plans are developed to help us to respond effectivelyto emergencies and to avoid a potentially severe disruption in our business andoperations. For deepwater drilling, interim requirements for oil spill preparednessand response, including crisis management response capability, were introducedin 2011 in the Gulf of Mexico. The intention is to build on these interimrequirements to put in place group-wide practices for both oil spill preparednessand response and crisis management.Successful recruitment and development of staff is central to our plans.We have programmes to recruit both graduates and experienced staff andwe maintain succession plans for key roles. We also operate training anddevelopment programmes, including relating to leadership, and we engage allemployees in regular performance-management processes.Compliance and control riskEthical misconduct or breaches of applicable laws or regulations could bedamaging to our reputation, results of operations and shareholder value andcould affect our licence to operate. Central to managing these risks is our codeof conduct (see page 31), the requirements of which apply to all employees,supported by our various group standards covering issues such as anti-bribery andcorruption, anti-money laundering and competition/anti-trust law compliance. Weseek to monitor for new regulations and legislation and plan our response to them.We also operate a range of compliance training and monitoring programmes forour employees.In the normal course of business, we are subject to risks around ourtreasury and trading activities, which could arise from shortcomings or failuresin our systems, risk management methodology, internal control processesor employees. In addressing these risks, we have adopted specific operatingstandards and control processes, including guidelines in relation to trading, andseek to monitor compliance through dedicated compliance and risk organizations.We also seek to maintain a positive and collaborative relationship with regulatorsand the industry at large.46 BP Annual Report and Form 20-F 2011