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Operational/hazard risks insurance type of risk * Focus on physical damage to property * 3rd party liability * Business interruption * Well control * Bring the well under control and re-drilling the original well * Directors & officers liability * Crime * Bonds – post security * Automobile * Ransom
Most important risk * Employees how to obtain these employees and retain them (highly educated)
Reserve replacement * You don’t have adequate replacements for your reserves * Assets and other physical property * Have to constantly buy land, look for opportunity in the world
What in the company makes you competitive to your peers?
Largest risk is in UK buzzard, produces about 40% of oil * If Nexen loses this rig, they would lose $5 billion, if lost, will threaten existence of company
Political & social risk Protection of people, and property (in foreign lands)
Foreign exchange * Always volatile * Tax rates
Project risks * Budget, staffing, time, access to materials
Environmental risk * One of most difficult things to predict * Hard to know what’s right and what’s true
Risk Management @ Nexen * Not involved in credit risk, employee risk * Have other people looking at it * Involved in risk identification and management * Not just a risk group but and insurance group * Existing risk as well as new risks * Look for contractual language to come up with a business deal that is fair * Identifying and quantifying risk to help the company make good decisions
Risk engineering/control * Contract out to engineers * Help the plant make decisions to put in systems to reduce risk and less severe
Risk financing * Risk retention – no real model for risk retention * Gut feeling exercise for senior management
Risk transfer

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