Risk Management Plans for BHP Mining, Oil and Gas Company - Case Study Example

Name Institution Coursewor Date Instructor RISK MANAGEMENT PLANS FOR BHP MINING, OIL AND GAS COMPANY Risk refers to uncertainties that are likely to affect smooth operation of any business activities. They threaten the market viability of certain products at some given periods. The uncertainties can lead to profit reduction or bring down a particular business enterprise completely down. Risks range from human factors to environmental factors. Risk management refers to detailed analysis of factors that are likely to affect the prosperity of a company’s commercial activities. It involves defining the risks associated with that particular organization’s commercial activities. This is followed by an organized layout designed to contain the uncertainties incase they arise. BHP BILLITON COMPANY Stakeholder analysis This is an Anglo-Australian multinational company. Its main line of operation involves mining of oil and gas. By market capitalization, it became the world’s third largest company. It has its headquarters situated in Melbourne in Australia. It has also other main management offices established in United Kingdom, at the city of London. Anglo-Dutch Billiton plc and the Australian Broken Hill proprietary Company Limited (BHP) became merged in 2001 to establish the BHP Billiton mining company. It is a dual listed company with major partner, which has a primary listing in the Australian Securities Exchange, being the Australian-registered BHP Billiton Limited. Another partner is the UK-registered BHP Billiton plc, which is also a FTSE 100 index constituent. It became the 9th largest London Stock Exchange company in the year 2011 after registering a market capitalization of £39.6 billion. BHP Billiton undertakes several mining and processing operations in about twenty-five countries giving employment opportunities to approximated 41000 people. Its customer sector groups include base metals, diamonds, aluminum, energy coal, iron ore, manganese, metallurgical coal, petroleum, stainless steel and uranium. BHP Billiton has a corporate social responsibility of being a participant in the voluntary principals on security and human rights. Risk context The operation of BHP Billiton is faced with various risks in different capacities. These as alluded to in the introduction range from environmental to human factors. Environmental factors that affect mining of oil and natural gas occur inn the mining sites. They can be demolished during such catastrophes or the mining deposited getting buried preventing the deposit accessibility. Pollution from, the surrounding areas may hamper the production of quality products. Human factors that may result in uncertainties occur on the inefficiency relating to the level of technical know-how, that concerns handling of machines and equipments. Market capacity is another area that human risk factors may stem from. This describes the availability of markets to contain the mining products. This will determine the prospects and determinations placed on the whole mining process and activities. Government policies are also to a great extent determinants of the operation and success of the BHP Billiton Company. A prediction and explicit understanding of the government policies will determine the modus operandi of the company. Financial policies also create identifiable contexts for risk determination. These involve credit facilities and operating costs. Personnel management also determines the dedication and commitment of the company’s employees. Employees can sometimes wreck havoc to the operation of the company. They are the determinants of the company’s success. Critical success factors For BHP Billiton Company to organize itself to realize success in it operation, it has to take into consideration of a number of factors. First, it has to stay ready to combat risks emanating from the environmental and physical hazards that may affect its field operations and the activities within out-of field premises. Several mechanisms should be launched for purposes of dealing with risks. Field and market studies are very imperative to analyze weather factors and market feasibilities respectively. This will aid in risk identification and the subsequent pre-planning and preparation for its management. Employment relations factors should be adhered for the realization of maximum involvement of employees in the production process. When their welfare is attended to dully, the result is minimized employee disturbances that may limit the production capacity of a company. Also of utmost importance, is the fact that, labor recruitment, should be based on expertise and professionalism. This will minimize simple technical anomalies that come about because of low levels of technical know how. This will realize success. Adherence to professionalism establishes the recognition of all aspects of economic operation as well as advanced approach and efficacy of technological application. Legal issues are very important in as far as, the operation and financial transaction of any company is concerned. This is carried out for reasons best suited for the company’s advantage. It aims at minimizing fraudulent transaction and duping. It is also very helpful in contract determination and awarding of tenders in mining and construction. Risks Mining of oil and gas is faced with several risk factors that threaten the operation and success of a company. BHP Billiton Company would risk succumbing to the following uncertainties associated with the mining of or carrying out commercial activities involving oil/petroleum and gas: Fluctuation of gas and oil prices. Selling of oil and gases is always subject to deviation of market prices. Oil and gas supply and the prevalent regulatory schemes have continued to affect the market. Some oil companies have continued to lower their prices affecting the production of other companies. Changes in the legislative and regulatory, together with explosion in the compliance cost have disabled the success of gas and oil industries. BHP Billiton companies would be faced by the regulations that would strictly control their market operation. Expansion of reserves or looking for other replace reserves has become very tricky in that it is not easy to locate the best and safe sites for this expansion or reserve replacement. The reserves can be very deep and extended further offshore. This can cause lost of oil through dripping and subversion. During the whole process of mining, people who are operating the machines may succumb to injury from may be defective equipments or accidents resulting from simple machine default or human error in fixing. Such occurrences can be very fatal to an extent of costing a life. Those operating them should be well aware of such anomalies and take caution to avert injuries. For instance, a case in deep water horizon when oil spilt in the Mexican gulf resulting into the death of eleven men by explosion. In the general operation, from mining to selling of both the gas and oil, they can be adversely affected by extreme weather conditions and natural disasters. For instance, in deep water areas’ mining is adversely affected by tropical storms and hurricane. The oil mining company may have identified a reserve and would want to carry out a mining activity. Problems may areas during the process of mining. This problem may be caused by inaccurate location of a reserve site. This can have problems like being too deep or extension towards offshore that may result into drifting. Climate change plus other environment restrictions and regulations may arise causing obstacles in the mining process. This may curtail the efforts of the company to carry out expansion activities of reserves, limiting the vision of the company. Legislations pertaining to green house gas emissions may be enforced to control the mining of natural gas, hence cutting short the income of the company. Stiff competition from other big and well established multinational companies, may pose threat to the market capacity of the same line of product. They would flood the market hence reducing income. Treatments of the prioritized risk To curtail employee uprising and pickets, extensive measures should be put in place to avert such actions. The best way is to take care of the workers’ welfare and respond adequately to the employees’ concern. This will help the company to minimize costs incurred in taking care of strikes and demonstrations. Competitions should not be taken as threats to income but should be depicted positively for healthy growth and expansion of the company. It should also be depicted as a benchmark to shape the companies form and improve in its production. Environment hazards should be well prepared for. Mechanisms for containing disasters should be well analyzed and disaster management modalities to be decentralized for quick response in case of a disaster. This comes together with the need to harness the operations of the red-cross activities. Skilled personnel should be always deployed in cases where there is a need to determine good sites for establishing reserves either for replacement or expansion. This should be done to avoid inaccurate identification of sites that may result in drifting or dripping of both the gas and oil. Injuries emanating from defective and human error in machines can be solved by ensuring regular but proper machine assessment. Regular maintenance activities are necessary as it help to keep the machines in proper conditions to handle a, lot of tasks without causing problems. In addition, it will be very important to ensure that right people with right skills and knowledge are assigned for the right machines. Details of monitoring arrangement Mining is an activity that involves a lot of monitoring and use of extensive detection devices. The use of closed circuit televisions is harnessed to tighten and ensure regular security check ups. This will help to avoid mischief from intruders and unscrupulous employees. The use of Global Positioning system (GPS) has also been employed to improve monitoring of various activities. Evaluation This risk management plan is very useful in helping BHP Billiton Company to identify possible risks that may thwart the activities of the company inn its bid to expand its activities and investments at large. It has provided the possible solutions helpful in containing the various risks identified and analyzed. It has also provided necessary critical success factors. References Berges, C.1993. 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Valuating Library Collections.  In Acquisitions '90: Conference on Acquisitions, Budgets, and Collections, May 16 and 17, 1990, St. Louis Missouri: Proceedings.  Edited by D. C. Genaway, 80-95. Canfield, OH: Genaway, Read More