Shell Risk Management Case Study

The first factor that affects Shell risk management is the fluctuating prices of crude oil, natural gas, oil products and chemicals. The fluctuating prices of oil are caused by the demand and supply in the market. Demand and supply in the market is affected by operational issues, natural disasters, weather, and political instability. This is the OPEC risk of Shell, which the oil price is controlled over by OPEC. As in 2014, oil supply was growing faster than demand even though it grew at a slower pace. During second half of 2015, the supply from USA was decreased, but the new technology and focus on most productive area can help to solve the issue. Shell was using new technology and a strategic place to continuously provide the crude oil to

LOA set accountability, responsibility, and identifying the approving authority for the various business transactions including matters that require Board approval. Financial Control Framework (FCF) and Corporate Financial Policy (CFP) also apply in Petronas. FCF is to enhance the quality of Petronas financial performance. It can ensure the adequacy and effectiveness of key internal controls operating at various levels within Petronas. CFP prescribes Petronas governing policy in effecting consistent practice of financial management, as well as forms the foundation upon which financial risk exposures are identified and strategies to manage such risk are developed. The Group Financial Risk Management Department (GFRMD) provides insurance that financial risk management practices are implemented in Petronas and enabled the visibility of Petronas risk. All these financial controls can help Petronas to improve their risk management and reduce Petronas

It is the organizational risk of Petronas. The organization structure of Petronas includes authority, responsibility, and accountability. An unclear organizational structure also influences the communication inside the company. These structure must continuously and transparently to improve Petronas’s governance and reflect their business culture. The shared values in Petronas are loyalty, professionalism, integrity, and cohesiveness. These values are manifested in Code of Conduct and Business Ethnics (CoBE). Employees must hold these shared values in conducting their job. There are some methods to reduce the organizational risk. Petronas applies whistleblowing policy to disclose any improper activity in company. Whistleblowing policy foster and maintain an environment where employees act appropriately. Petronas also applies No Gift Policy. Employees in Petronas are prohibited to receive any gift to maintain the employees always act in the best interest of Petronas. Labour is important to Petronas, so Petronas has provided structured training, mobility, and opportunities to employees. Employee Performance Management (EPM) is used by Petronas to sustain high performance in their