Our risk management approach

Our Enterprise Risk Management Framework provides a comprehensive and structured approach to identify, prioritize, understand, and manage ExxonMobil’s most important risks. It is designed to drive consistency across risk types and support monitoring key risks. 

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Our Enterprise Risk Management Framework

We assess climate change and energy transition risks across key risk areas of our Enterprise Risk Management Framework. This ensures a comprehensive approach to managing potential impacts on our business.

  • Enterprise Risk Framework elements:

    1. A way to organize and aggregate risks
    2. Robust risk identification practices
    3. A prioritization method
    4. Systems and processes to manage risk
    5. Risk governance to support oversight

  • Risk types:

    1. Strategic
    2. Reputational
    3. Financial
    4. Operational
    5. Safety, Security, Health, and Environment
    6. Compliance and litigation

    Our approach to risk governance is multilayered and includes clearly defined roles and responsibilities for managing each type of risk, including responsibilities of risk owners, functional experts, and independent verifiers. Each type of risk is managed and supported by centralized organizations that fulfill these defined roles.

    For more discussion of our Board’s oversight see Governance and executive compensation.

    Physical risk: protection of assets, the community, and the environment

    We have extensive experience operating in a wide range of challenging physical environments around the world. 

    Effective physical risk management requires the ongoing assessment and mitigation of potential impacts to our people, our assets, the community, and the environments in which we operate. Before pursuing a new development, we assess potential environmental, socioeconomic, and health impacts associated with construction and operations. As appropriate, we use data, advanced computer modeling, and insights gleaned from consultation with local communities. We also work with regulators to share information and seek necessary approvals. This process gives us a comprehensive understanding of possible impacts. We use these insights to implement measures to avoid, reduce, or remedy the risks or impacts mentioned above. 

    When we assess physical environmental risks, we evaluate the type and location of facilities and investments. As an example, changes in patterns of waves, wind, or ice floes can affect offshore facilities. Onshore facilities could be impacted by sea-level changes, storm surge, flooding, wind and seismic activity, or geo-technical considerations. We conduct environmental assessments before building and operating facilities to ensure that protective measures and procedures are in place.

    The Hebron platform is located off the coast of eastern Canada in 92 meters of water. The platform is a reinforced concrete, gravity-based structure designed to help it withstand ice, severe weather, and other ocean-related conditions. Hebron was engineered and wave-tank tested for storms so extreme they might occur only once every 10,000 years. On Nov. 14, 2018, the Grand Banks saw its largest storm in 30 years, estimated as a 100-year return period event. Following temporary shutdown of all Grand Banks platforms, Hebron was up and running within a week without any major issues. 

     

    Our team of scientists and engineers have expertise across a wide range of disciplines. Through their active participation in industry groups, they gain insight into industry best practices. Through their leadership, they advise and improve upon industry standards which are then adopted to enhance our own standards and procedures. 

    We rely on our professional experience in tandem with industry standards to cover a range of uncertainties. These standards include the American Society of Civil Engineers (ASCE 7) Minimum Design Loads and Associated Criteria for Buildings and Other Structures for onshore facilities.1 Industry standards for offshore facilities include the American Petroleum Institute (API) Recommended Practices RP-2 series2 and the International Standards Organization (ISO) 19900 series.3 After the construction of a facility, we manage facility integrity through periodic checks of key aspects of the structures.

    Once facilities are in operation, we maintain plans for disaster preparedness, response, and business continuity. These plans are detailed, well-practiced, continuously improved and are tailored to each facility to help us prepare for unplanned events, including extreme weather. We also conduct periodic emergency drills with the appropriate government agencies and community coalitions. This helps to improve readiness and minimize the impacts of an event. Strategic emergency support groups are established around the world to develop and practice emergency response strategies and assist field responders. Regardless of the size or complexity of any potential incident, all our facilities and business units have access to readily available trained responders and regional response teams.

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    FOOTNOTES:

    1. American Society of Civil Engineers (ASCE 7) Minimum Design Loads and Associated Criteria for Buildings and Other Structures, https://doi.org/10.1061/9780784415788.
    2. American Petroleum Institute (API) Recommended Practices RP-2 series: https://www.api.org/-/media/files/oil-and-natural-gas/exploration/offshore/api-standards-for-safe-offshore-operations-brochure.pdf and https://www.api.org/oil-and-natural-gas/wells-to-consumer/exploration-and-production/offshore/api-standards-for-safe-offshore-operatio.
    3. International Standards Organization (ISO) 19900 series for offshore structures:  https://www.iso.org/standard/69761.html.