BP (BP)

Operational risks

Process safety: Inherent in BP Group’s operations are hazards that require continual oversight and control. There are risks of technical integrity failure and loss of containment of hydrocarbons and other hazardous material at operating sites or pipelines. Failure to manage these risks could result in injury or loss of life, environmental damage, or loss of production and could result in regulatory action, legal liability and damage to our reputation.

Personal safety: Inability to provide safe environments for BP Group’s workforce and the public could lead to injuries or loss of life and could result in regulatory action, legal liability and damage to BP Group’s reputation.

Environmental: If BP Group does not apply its resources to overcome the perceived trade-off between global access to energy and the protection or improvement of the natural environment, BP Group could fail to live up to its aspirations of no or minimal damage to the environment and contributing to human progress.

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Security: Security threats require continuous oversight and control. Acts of terrorism against its plants and offices, pipelines, transportation or computer systems could severely disrupt business and operations and could cause harm to people.

Product quality: Supplying customers with on-specification products is critical to maintaining its licence to operate and BP Group’s reputation in the marketplace. Failure to meet product quality standards throughout the value chain could lead to harm to people and the environment and loss of customers.

Drilling and production: Exploration and production require high levels of investment and are subject to natural hazards and other uncertainties, including those relating to the physical characteristics of an oil or natural gas field. The cost of drilling, completing or operating wells is often uncertain. BP Group may be required to curtail, delay or cancel drilling operations because of a variety of factors, including unexpected drilling conditions, pressure or irregularities in geological formations, equipment failures or accidents, adverse weather conditions and compliance with governmental requirements.

Transportation: All modes of transportation of hydrocarbons contain inherent risks. A loss of containment of hydrocarbons and other hazardous material could occur during transportation by road, rail, sea or pipeline. This is a significant risk due to the potential impact of a release on the environment and people and given the high volumes involved.

Major project delivery: Successful execution of BP Group’s plan depends critically on implementing the activities to deliver the major projects over the plan period. Poor delivery of any major project that underpins production growth and/or a major programme designed to enhance shareholder value could adversely affect BP Group’s financial performance.

Digital infrastructure: The reliability and security of BP Group’s digital infrastructure are critical to maintaining BP Group’s business applications availability. A breach of BP Group’s digital security could cause serious damage to business operations and, in some circumstances, could result in injury to people, damage to assets, harm to the environment and breaches of regulations.

Business continuity and disaster recovery: Contingency plans are required to continue or recover operations following a disruption or incident. Inability to restore or replace critical capacity to an agreed level within an agreed timeframe would prolong the impact of any disruption and could severely affect business and operations.

Crisis management: Crisis management plans and capability are essential to deal with emergencies at every level of BP Group’s operations. If BP Group does not respond or is perceived not to respond in an appropriate manner to either an external or internal crisis, BP Group’s business and operations could be severely disrupted.

People and capability: Employee training and development and successful recruitment of new staff, in particular petroleum engineers and scientists, are key to implementing BP Group’s plans. Inability to develop the human capacity and capability across the organization could jeopardize performance delivery.

Treasury and trading activities: In the normal course of business, BP Group is subject to operational risk around BP Group’s treasury and trading activities. Control of these activities is highly dependent on BP Group’s ability to process, manage and monitor a large number of complex transactions across many markets and currencies. Shortcomings or failures in BP Group’s systems, risk management methodology, internal control processes or people could lead to disruption of BP Group’s business, financial loss, regulatory intervention or damage to BP Group’s reputation.

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Table of Contents

Operational risks

Process safety

Inherent in our operations are hazards that require continuous oversight and control. There are risks of technical integrity failure and loss of containment of hydrocarbons and other hazardous material at operating sites or pipelines. Failure to manage these risks could result in injury or loss of life, environmental damage, or loss of production and could result in regulatory action, legal liability and damage to our reputation.
 
 

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Principal risks and uncertainties (continued)

Personal safety

Inability to provide safe environments for our workforce and the public could lead to injuries or loss of life and could result in regulatory action, legal liability and damage to our reputation.
 

Environmental

If we do not apply our resources to overcome the perceived trade-off between global access to energy and the protection or improvement of the natural environment, we could fail to live up to our aspirations of no or minimal damage to the environment and contributing to human progress.
 

Security

Security threats require continuous oversight and control. Acts of terrorism against our plants and offices, pipelines, transportation or computer systems could severely disrupt business and operations and could cause harm to people.
 

Product quality

Supplying customers with on-specification products is critical to maintaining our licence to operate and our reputation in the marketplace. Failure to meet product quality standards throughout the value chain could lead to harm to people and the environment and loss of customers.
 

Drilling and production

Exploration and production require high levels of investment and are subject to natural hazards and other uncertainties, including those relating to the physical characteristics of an oil or natural gas field. The cost of drilling, completing or operating wells is often uncertain. We may be required to curtail, delay or cancel drilling operations because of a variety of factors, including unexpected drilling conditions, pressure or irregularities in geological formations, equipment failures or accidents, adverse weather conditions and compliance with governmental requirements.
 

Transportation

All modes of transportation of hydrocarbons contain inherent risks. A loss of containment of hydrocarbons and other hazardous material could occur during transportation by road, rail, sea or pipeline. This is a significant risk due to the potential impact of a release on the environment and people and given the high volumes involved.
 

Major project delivery

Successful execution of our group plan (see  BP Annual Report and Accounts 2008,  page 15) depends critically on implementing the activities to deliver the major projects over the plan period. Poor delivery of any major project that underpins production growth and/or a major programme designed to enhance shareholder value could adversely affect our financial performance.
 

Digital infrastructure

The reliability and security of our digital infrastructure are critical to maintaining our business applications availability. A breach of our digital security could cause serious damage to business operations and, in some circumstances, could result in injury to people, damage to assets, harm to the environment and breaches of regulations.
 

Business continuity and disaster recovery

Contingency plans are required to continue or recover operations following a disruption or incident. Inability to restore or replace critical capacity to an agreed level within an agreed timeframe would prolong the impact of any disruption and could severely affect business and operations.
 

Crisis management

Crisis management plans and capability are essential to deal with emergencies at every level of our operations. If we do not respond or are perceived not to respond in an appropriate manner to either an external or internal crisis, our business and operations could be severely disrupted.
 

People and capability

Employee training, development and successful recruitment of new staff, in particular petroleum engineers and scientists, are key to implementing our plans. Inability to develop the human capacity and capability across the organization could jeopardize performance delivery.
 

Treasury and trading activities

In the normal course of business, we are subject to operational risk around our treasury and trading activities. Control of these activities is highly dependent on our ability to process, manage and monitor a large number of complex transactions across many markets and currencies. Shortcomings or failures in our systems, risk management methodology, internal control processes or people could lead to disruption of our business, financial loss, regulatory intervention or damage to our reputation.
 
 

Process safety

Inherent in our operations are hazards
that require continuous oversight and control. There are risks of technical integrity
failure and loss of containment of hydrocarbons and other hazardous material at operating
sites or pipelines. Failure to manage these risks could result in injury or loss of life,
environmental damage, or loss of production and could result in regulatory action, legal
liability and damage to our reputation.

 

 

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Principal risks and uncertainties
(continued)

Personal safety

Inability to provide safe environments
for our workforce and the public could lead to injuries or loss of life and could result in
regulatory action, legal liability and damage to our reputation.

 

Environmental

If we do not apply our resources to
overcome the perceived trade-off between global access to energy and the protection or
improvement of the natural environment, we could fail to live up to our aspirations of no
or minimal damage to the environment and contributing to human progress.

 

Security

Security threats require continuous
oversight and control. Acts of terrorism against our plants and offices, pipelines,
transportation or computer systems could severely disrupt business and operations and could
cause harm to people.

 

Product quality

Supplying customers with
on-specification products is critical to maintaining our licence to operate and our
reputation in the marketplace. Failure to meet product quality standards throughout the
value chain could lead to harm to people and the environment and loss of
customers.

 

Drilling and
production

Exploration and production require high
levels of investment and are subject to natural hazards and other uncertainties, including
those relating to the physical characteristics of an oil or natural gas field. The cost of
drilling, completing or operating wells is often uncertain. We may be required to curtail,
delay or cancel drilling operations because of a variety of factors, including unexpected
drilling conditions, pressure or irregularities in geological formations, equipment
failures or accidents, adverse weather conditions and compliance with governmental
requirements.

 

Transportation

All modes of transportation of
hydrocarbons contain inherent risks. A loss of containment of hydrocarbons and other
hazardous material could occur during transportation by road, rail, sea or pipeline. This
is a significant risk due to the potential impact of a release on the environment and
people and given the high volumes involved.

 

Major project delivery

Successful execution of our group plan
(see 
BP Annual Report and
Accounts
2008, 
page 15) depends critically on
implementing the activities to deliver the major projects over the plan period. Poor
delivery of any major project that underpins production growth and/or a major programme
designed to enhance shareholder value could adversely affect our financial
performance.

 

Digital infrastructure

The reliability and security of our
digital infrastructure are critical to maintaining our business applications availability.
A breach of our digital security could cause serious damage to business operations and, in
some circumstances, could result in injury to people, damage to assets, harm to the
environment and breaches of regulations.

 

Business continuity and disaster
recovery

Contingency plans are required to
continue or recover operations following a disruption or incident. Inability to restore or
replace critical capacity to an agreed level within an agreed timeframe would prolong the
impact of any disruption and could severely affect business and operations.

 

Crisis management

Crisis management plans and capability
are essential to deal with emergencies at every level of our operations. If we do not
respond or are perceived not to respond in an appropriate manner to either an external or
internal crisis, our business and operations could be severely disrupted.

 

People and capability

Employee training, development and
successful recruitment of new staff, in particular petroleum engineers and scientists, are
key to implementing our plans. Inability to develop the human capacity and capability
across the organization could jeopardize performance delivery.

 

Treasury and trading
activities

In the normal course of business, we are
subject to operational risk around our treasury and trading activities. Control of these
activities is highly dependent on our ability to process, manage and monitor a large number
of complex transactions across many markets and currencies. Shortcomings or failures in our
systems, risk management methodology, internal control processes or people could lead to
disruption of our business, financial loss, regulatory intervention or damage to our
reputation.

 

 

Operational risks

Process safety: Inherent in BP Group’s operations are hazards that require continual oversight and control. There are risks of technical integrity failure and loss of containment of hydrocarbons and other hazardous material at operating sites or pipelines. Failure to manage these risks could result in injury or loss of life, environmental damage, or loss of production and could result in regulatory action, legal liability and damage to our reputation.

Personal safety: Inability to provide safe environments for BP Group’s workforce and the public could lead to injuries or loss of life and could result in regulatory action, legal liability and damage to BP Group’s reputation.

Environmental: If BP Group does not apply its resources to overcome the perceived trade-off between global access to energy and the protection or improvement of the natural environment, BP Group could fail to live up to its aspirations of no or minimal damage to the environment and contributing to human progress.

4

Table of Contents

Security: Security threats require continuous oversight and control. Acts of terrorism against its plants and offices, pipelines, transportation or computer systems could severely disrupt business and operations and could cause harm to people.

Product quality: Supplying customers with on-specification products is critical to maintaining its licence to operate and BP Group’s reputation in the marketplace. Failure to meet product quality standards throughout the value chain could lead to harm to people and the environment and loss of customers.

Drilling and production: Exploration and production require high levels of investment and are subject to natural hazards and other uncertainties, including those relating to the physical characteristics of an oil or natural gas field. The cost of drilling, completing or operating wells is often uncertain. BP Group may be required to curtail, delay or cancel drilling operations because of a variety of factors, including unexpected drilling conditions, pressure or irregularities in geological formations, equipment failures or accidents, adverse weather conditions and compliance with governmental requirements.

Transportation: All modes of transportation of hydrocarbons contain inherent risks. A loss of containment of hydrocarbons and other hazardous material could occur during transportation by road, rail, sea or pipeline. This is a significant risk due to the potential impact of a release on the environment and people and given the high volumes involved.

Major project delivery: Successful execution of BP Group’s plan depends critically on implementing the activities to deliver the major projects over the plan period. Poor delivery of any major project that underpins production growth and/or a major programme designed to enhance shareholder value could adversely affect BP Group’s financial performance.

Digital infrastructure: The reliability and security of BP Group’s digital infrastructure are critical to maintaining BP Group’s business applications availability. A breach of BP Group’s digital security could cause serious damage to business operations and, in some circumstances, could result in injury to people, damage to assets, harm to the environment and breaches of regulations.

Business continuity and disaster recovery: Contingency plans are required to continue or recover operations following a disruption or incident. Inability to restore or replace critical capacity to an agreed level within an agreed timeframe would prolong the impact of any disruption and could severely affect business and operations.

Crisis management: Crisis management plans and capability are essential to deal with emergencies at every level of BP Group’s operations. If BP Group does not respond or is perceived not to respond in an appropriate manner to either an external or internal crisis, BP Group’s business and operations could be severely disrupted.

People and capability: Employee training and development and successful recruitment of new staff, in particular petroleum engineers and scientists, are key to implementing BP Group’s plans. Inability to develop the human capacity and capability across the organization could jeopardize performance delivery.

Treasury and trading activities: In the normal course of business, BP Group is subject to operational risk around BP Group’s treasury and trading activities. Control of these activities is highly dependent on BP Group’s ability to process, manage and monitor a large number of complex transactions across many markets and currencies. Shortcomings or failures in BP Group’s systems, risk management methodology, internal control processes or people could lead to disruption of BP Group’s business, financial loss, regulatory intervention or damage to BP Group’s reputation.

5

Table of Contents

Operational risks

Process safety: Inherent in BP Group’s operations are hazards that require continual oversight and control. There are risks of technical integrity failure and loss of containment of hydrocarbons and other hazardous material at operating sites or pipelines. Failure to manage these risks could result in injury or loss of life, environmental damage, or loss of production and could result in regulatory action, legal liability and damage to our reputation.

Personal safety: Inability to provide safe environments for BP Group’s workforce and the public could lead to injuries or loss of life and could result in regulatory action, legal liability and damage to BP Group’s reputation.

Environmental: If BP Group does not apply its resources to overcome the perceived trade-off between global access to energy and the protection or improvement of the natural environment, BP Group could fail to live up to its aspirations of no or minimal damage to the environment and contributing to human progress.

4

Table of Contents

Security: Security threats require continuous oversight and control. Acts of terrorism against its plants and offices, pipelines, transportation or computer systems could severely disrupt business and operations and could cause harm to people.

Product quality: Supplying customers with on-specification products is critical to maintaining its licence to operate and BP Group’s reputation in the marketplace. Failure to meet product quality standards throughout the value chain could lead to harm to people and the environment and loss of customers.

Drilling and production: Exploration and production require high levels of investment and are subject to natural hazards and other uncertainties, including those relating to the physical characteristics of an oil or natural gas field. The cost of drilling, completing or operating wells is often uncertain. BP Group may be required to curtail, delay or cancel drilling operations because of a variety of factors, including unexpected drilling conditions, pressure or irregularities in geological formations, equipment failures or accidents, adverse weather conditions and compliance with governmental requirements.

Transportation: All modes of transportation of hydrocarbons contain inherent risks. A loss of containment of hydrocarbons and other hazardous material could occur during transportation by road, rail, sea or pipeline. This is a significant risk due to the potential impact of a release on the environment and people and given the high volumes involved.

Major project delivery: Successful execution of BP Group’s plan depends critically on implementing the activities to deliver the major projects over the plan period. Poor delivery of any major project that underpins production growth and/or a major programme designed to enhance shareholder value could adversely affect BP Group’s financial performance.

Digital infrastructure: The reliability and security of BP Group’s digital infrastructure are critical to maintaining BP Group’s business applications availability. A breach of BP Group’s digital security could cause serious damage to business operations and, in some circumstances, could result in injury to people, damage to assets, harm to the environment and breaches of regulations.

Business continuity and disaster recovery: Contingency plans are required to continue or recover operations following a disruption or incident. Inability to restore or replace critical capacity to an agreed level within an agreed timeframe would prolong the impact of any disruption and could severely affect business and operations.

Crisis management: Crisis management plans and capability are essential to deal with emergencies at every level of BP Group’s operations. If BP Group does not respond or is perceived not to respond in an appropriate manner to either an external or internal crisis, BP Group’s business and operations could be severely disrupted.

People and capability: Employee training and development and successful recruitment of new staff, in particular petroleum engineers and scientists, are key to implementing BP Group’s plans. Inability to develop the human capacity and capability across the organization could jeopardize performance delivery.

Treasury and trading activities: In the normal course of business, BP Group is subject to operational risk around BP Group’s treasury and trading activities. Control of these activities is highly dependent on BP Group’s ability to process, manage and monitor a large number of complex transactions across many markets and currencies. Shortcomings or failures in BP Group’s systems, risk management methodology, internal control processes or people could lead to disruption of BP Group’s business, financial loss, regulatory intervention or damage to BP Group’s reputation.

5

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