Managing the risks to our business is essential to the long-term success and sustainability of the Group.
There are inherent dangers associated with oil and gas exploration and development operations. Therefore, the Group’s approach to risk is to actively seek out investment opportunities which provide the right balance of political, commercial and technical risks and manage these risks to an acceptable level.
The Group’s robust risk management framework is supported from the top down and is embedded throughout the organisation in all activities. It supports Cairn’s entrepreneurial approach to business and this enhances the chances of safely engaging in successful business opportunities and delivering value to shareholders and other stakeholders.
Cairn’s system for identifying and managing risks is embedded in our organisational structure, operations and management systems and accords with the risk management guidelines and principles set out in ISO 31000 (the International Standard for Risk Management).
We address business risks across the Group in a systematic way that ensures the Board’s assessment of risk is informed by risk factors and mitigating controls originating from and identified by the Group’s regional assets, functional departments and in-country operations. The structure also ensures that retained risks do not fall outside the tolerance levels of the Company Risk Appetite Statement.
We have a robust risk management system in place to support risk identification, analysis, evaluation, treatment and ongoing monitoring of risks across the Group.
The risks associated with the delivery of the strategy, business plan and annual work programme and the associated mitigation measures and action plans are maintained in a series of risk registers at project, department, asset, regional and group levels.
The risks and mitigating actions from all of these sources are consolidated into the Group risk matrix and register which is regularly reviewed by the Executive before being presented at the risk management committee, which is chaired by the CFO, James Smith. Risk management updates are provided at each audit committee and Board meeting.