Description
This is a presentation about chervon environmental management.
Environmental Risk Management at Chevron
Click to edit Master subtitle style
1/25/13
Introduction: ERM at Chevron Corp.
Risk is part of Daily Operations of Chevron. ? Risks of damaging Natural Environment, Human Health, Corporate Profitability, or all three. ? Trade-off between Risk and Financial Costs was main concern of Mark Keller, GM of HSE. ? Mark Keller had past experience in Environmental Decision making process called DEMA which resulted in Savings to 1/25/13 Chevron.
?
Overview of Chevron
? ?
?
?
?
? 1/25/13
1899 : Pacific Coast Oil Company formed 1906 : Standard Oil Company merges with Pacific Coast. Standard Oil company grows aggressively and gains access to Saudi, Louisiana, Mexico and Hibernia Discovery in 1979. 1980 : Standard Company named to Chevron. 1984 : Acquires Gulf Corporation for 13.2 b $. 1988 : Sheds 6b $ assets that didn’t fit in
Chevron’s Environmental Situation
Company CHEVRON EXXON MOBIL Environmen % of tal Costs Revenues
$ 893mn $1566mn $ 625mn 2.1% 1.1% 0.9%
% of Total Costs
9.0% 5.5% 8.4%
as a company that was a responsible steward of natural environment ? Chevron’s Goal : To be the industry leader in safety and health performance and to be recognized worldwide for 1/25/13 environmental excellence.
? Positioned
Effective Risk Mgmt
?
Advantages
? Reduction
in probability and magnitude of accidents leading to reduction in overall costs ? Enhance brand name and reputation of Chevron with customers, regulators and public ? Solid environmental reputation to help Chevron obtain access to domestic and foreign crude oil stocks controlled by government regulators
?
1/25/13
Environmental Investments : Competing with other investments
Internal risk management in Chevron
?
?
?
Historically, decisions made by senior executives characterized by judgment and not analysis. For e.g. replacement of tanks. The use of the internal risk management system has helped the company reduce costs substantially. The company used 2 methods to check internal environmental risk:
? Policy
530 ? Role of Incentives
1/25/13
Policy 530
?Most
important single instrument for environmental risk management, internally. ?To make Chevron a leader within the industry by emphasizing innovation and encouraging creative solutions to improve competitive position. ?10 key elements were identified. 1/25/13
Role of incentives
? ‘Success
Sharing’ plan, primary formal incentive system largely based on profit sharing; only minor part linked to attainment of safety or environmental objectives. ? Tie up Environmental performance to promotion process. ? The reasons for the same were 1. To set aggressive safety and environmental goals and not aim 1/25/13 low to guarantee bonus.
General corporate strategy of self insurance up to certain level (around $200-300 Mn) above which external insurance needed ? The deductible varied in different areas of corporation and had a positive effect on Responsibility reducing moral incentive structure, For Risk ?Decision relating to environmental risk mgmt. hazards not centralized ? Difficult to self insure catastrophic event ?Only a few exceptions are there which includes like Exxon Valdez
?
External Risk Management at Chevron
the HSE Group which has company wide responsibility on certain policies ?Many other decisions taken at operating unit 1/25/13 level giving ground level managers to ensure
Analytical Environment Risk Management
? Policy
530 extended into management guidelines Risk Management Process incorporated the basic elements of pipeline company’s analytical model set of approaches having 4 main phases:
? E&S
? Broad
1/25/13
DEMA
? DEMA
developed by CRTC after consultation with upstream and downstream operations ? A more applicable system for Chevron compared to the E&S risk management system ? Used by managers to determine cost benefit analysis ? Helps sets priorities for ERM on a analytical basis ? A spreadsheet with input sheets, valuation 1/25/13 tables and 2 recap sheets
? ? ? ? ? ? ?
Event Likelihood - 1 to 4 rating Heath and Safety Impact – 1 to 4 rating Environmental Impact – 1 to 5 rating Financial Performance – 1 to 6 rating Public concern – 1 to 6 rating New dimensions to be added for different business divisions Standardize tables of weights or conversion rates devised
Factor Consideration for Scenarios
Implementation of ?Implemented in Richmond refinery and DEMA
Chevron Overseas Petroleum Inc (COPI) ?Hundreds of projects evaluated ?Provided significant benefits ?Helped in allocating risk management 1/25/13 resources
Recommendations For Chevron
Should utilize a structural approach such as DEMA for environmental risk management in a phased manner ? CRTC should be engaged to refine the analytical risk management tools ? Level of customization of any such tools needs to be increased as the operations differ widely and so do the associated risks ? Environmental costs should be minimized by reducing the probabilities of incidents; more stress on training of 1/25/13 ground level staff and specifically
?
Thank you !
Click to edit Master subtitle style
1/25/13
doc_305263946.pptx
This is a presentation about chervon environmental management.
Environmental Risk Management at Chevron
Click to edit Master subtitle style
1/25/13
Introduction: ERM at Chevron Corp.
Risk is part of Daily Operations of Chevron. ? Risks of damaging Natural Environment, Human Health, Corporate Profitability, or all three. ? Trade-off between Risk and Financial Costs was main concern of Mark Keller, GM of HSE. ? Mark Keller had past experience in Environmental Decision making process called DEMA which resulted in Savings to 1/25/13 Chevron.
?
Overview of Chevron
? ?
?
?
?
? 1/25/13
1899 : Pacific Coast Oil Company formed 1906 : Standard Oil Company merges with Pacific Coast. Standard Oil company grows aggressively and gains access to Saudi, Louisiana, Mexico and Hibernia Discovery in 1979. 1980 : Standard Company named to Chevron. 1984 : Acquires Gulf Corporation for 13.2 b $. 1988 : Sheds 6b $ assets that didn’t fit in
Chevron’s Environmental Situation
Company CHEVRON EXXON MOBIL Environmen % of tal Costs Revenues
$ 893mn $1566mn $ 625mn 2.1% 1.1% 0.9%
% of Total Costs
9.0% 5.5% 8.4%
as a company that was a responsible steward of natural environment ? Chevron’s Goal : To be the industry leader in safety and health performance and to be recognized worldwide for 1/25/13 environmental excellence.
? Positioned
Effective Risk Mgmt
?
Advantages
? Reduction
in probability and magnitude of accidents leading to reduction in overall costs ? Enhance brand name and reputation of Chevron with customers, regulators and public ? Solid environmental reputation to help Chevron obtain access to domestic and foreign crude oil stocks controlled by government regulators
?
1/25/13
Environmental Investments : Competing with other investments
Internal risk management in Chevron
?
?
?
Historically, decisions made by senior executives characterized by judgment and not analysis. For e.g. replacement of tanks. The use of the internal risk management system has helped the company reduce costs substantially. The company used 2 methods to check internal environmental risk:
? Policy
530 ? Role of Incentives
1/25/13
Policy 530
?Most
important single instrument for environmental risk management, internally. ?To make Chevron a leader within the industry by emphasizing innovation and encouraging creative solutions to improve competitive position. ?10 key elements were identified. 1/25/13
Role of incentives
? ‘Success
Sharing’ plan, primary formal incentive system largely based on profit sharing; only minor part linked to attainment of safety or environmental objectives. ? Tie up Environmental performance to promotion process. ? The reasons for the same were 1. To set aggressive safety and environmental goals and not aim 1/25/13 low to guarantee bonus.
General corporate strategy of self insurance up to certain level (around $200-300 Mn) above which external insurance needed ? The deductible varied in different areas of corporation and had a positive effect on Responsibility reducing moral incentive structure, For Risk ?Decision relating to environmental risk mgmt. hazards not centralized ? Difficult to self insure catastrophic event ?Only a few exceptions are there which includes like Exxon Valdez
?
External Risk Management at Chevron
the HSE Group which has company wide responsibility on certain policies ?Many other decisions taken at operating unit 1/25/13 level giving ground level managers to ensure
Analytical Environment Risk Management
? Policy
530 extended into management guidelines Risk Management Process incorporated the basic elements of pipeline company’s analytical model set of approaches having 4 main phases:
? E&S
? Broad
1/25/13
DEMA
? DEMA
developed by CRTC after consultation with upstream and downstream operations ? A more applicable system for Chevron compared to the E&S risk management system ? Used by managers to determine cost benefit analysis ? Helps sets priorities for ERM on a analytical basis ? A spreadsheet with input sheets, valuation 1/25/13 tables and 2 recap sheets
? ? ? ? ? ? ?
Event Likelihood - 1 to 4 rating Heath and Safety Impact – 1 to 4 rating Environmental Impact – 1 to 5 rating Financial Performance – 1 to 6 rating Public concern – 1 to 6 rating New dimensions to be added for different business divisions Standardize tables of weights or conversion rates devised
Factor Consideration for Scenarios
Implementation of ?Implemented in Richmond refinery and DEMA
Chevron Overseas Petroleum Inc (COPI) ?Hundreds of projects evaluated ?Provided significant benefits ?Helped in allocating risk management 1/25/13 resources
Recommendations For Chevron
Should utilize a structural approach such as DEMA for environmental risk management in a phased manner ? CRTC should be engaged to refine the analytical risk management tools ? Level of customization of any such tools needs to be increased as the operations differ widely and so do the associated risks ? Environmental costs should be minimized by reducing the probabilities of incidents; more stress on training of 1/25/13 ground level staff and specifically
?
Thank you !
Click to edit Master subtitle style
1/25/13
doc_305263946.pptx