This website uses cookies to ensure you have the best experience. Learn more

Risk Management Chevron Essay

2867 words - 12 pages

Executive Summary
Chevron commits huge resources to tackle environmental risks; this report studies the viability of doing so. We find that (1) it is using a right combination of internal and external tools to increase workers’ awareness, diversify environmental risks and mitigate moral hazard at the same time; and (2) the Decision Making (“DEMA”) system is valuable to the company in providing a systematic framework to quantify environmental risks.

Chevron operates in the business of petroleum and natural gas exploration, production, refining and marketing, and as such faces huge environmental risks such as oil spills and exhaust emissions. Throughout the years ...view middle of the document...

2. Employee training and education programs
Chevron believes skills and attitudes of employees are directly related to losses due to “human” incidents. Hence it has invested heavily on training in order to reduce the probability and severity of environmental damage.

3. Set up corporate-wide response groups
Response groups can be deployed within 24-hour to effectively deal with potential losses. Unexpected losses due to delay of deployment could be reduced amid emergency events.

4. External insurance against environmental risk above certain level
Chevron buys an umbrella protection for series of liabilities. This protection includes traditional insurance used to hedge against any losses above certain retention level. Chevron keeps any loss below the retention; this affects positively on incentive structure and reduces the problem of moral hazard.

5. Environmental performance related to promotion
Chevron considers environmental performance a criterion in evaluating promotion. This encourages employees to attain safety and environmental objectives and promotes environmental protection culture throughout the corporation.

Also, in contrast to corporate norm, Chevron does not use environmental performance to determine managers’ bonuses or penalty, which arguably could promote imprudent behaviours.

Are the tools right for managing business risk?
Tool 1 and 2 are regarded as core value of Chevron Corporation. Internal policy that emphasises people and environment protection is always good in improving public image. Incorporating environmental protection concepts into employees’ training sessions does not require extra large expenses, as only teaching materials need to be amended. Furthermore, attitude and culture are better implemented at the earliest stage of employment and public should always appreciate what Chevron has done extra to care the society.

Tool 3 mitigates losses engendered by emergency environmental accidents, as well as lowers the extent of unfavourable consequences. For the sake of public image, it was politically correct to have a stand-by rescue team although the efficiency of this measure is doubtful.

Tool 4 seeks protection from third party to lower the potential losses incurred to Chevron. Diversifying risk is sensible for such a risky business, but the amount of deductible and insurance needs to be evaluated explicitly. Trade-off between moral hazard (lower premium) and insufficient protection (lower insurance) would lead to Armageddon if extremely rare event happens. Hence this tool should be complemented by actuarial model to determine the appropriate amount of protection.

Tool 5 is a creative tool that achieves the firm’s objective without costing extra. However, employees may strive for promotion and spend too many resources on environment protection; on the other hand they may refuse to take risky projects that may cause severe ecological problems. There...

Other Papers Like Risk Management - Chevron

Strategic Alliance Essay

3401 words - 14 pages degree of involvement of the partners in the alliance and ownership of capital; Management of the resources conferred in the alliance, their reparability and the risk of other partners appropriating these resources. I believe that alliances are sometimes formed to outsource business functions, which can include marketing, production, accounting, sales, or virtually any other process, to a company which can do it better and cheaper. Conclusion

Nike Report


Assesing Financial Health

3451 words - 14 pages money and the firm’s ability to meet fixed charges. Market ratios give insight into how well investors in the marketplace feel the firm is doing in terms of return and risk. © Dr. C. Bulent Aybar Financial Ratios © Dr. C. Bulent Aybar © Dr. C. Bulent Aybar ROEs and Levers of Performance for 10 Diverse Companies, 2007 Return on Equity Adobe Systems Chevron . Google Hewlett Packard JP Morgan Chase Norfolk Southern

Supply Chain Role in the Oil and Gas Industry

4244 words - 17 pages risk associated with the business cycle of growth and recessions” (Chima, 2007). LOGISTICS In the oil and gas industry, a solid logistics management program is critical for the success, efficiency, and value of the firm. Logistics programs contribute to the place utility by improving the movement of raw materials, crude oil, and refined fuels through the system to where they are needed, whether to the end customer or to the next link down

Supply Chain in Oil and Gas

4244 words - 17 pages risk associated with the business cycle of growth and recessions” (Chima, 2007). LOGISTICS In the oil and gas industry, a solid logistics management program is critical for the success, efficiency, and value of the firm. Logistics programs contribute to the place utility by improving the movement of raw materials, crude oil, and refined fuels through the system to where they are needed, whether to the end customer or to the next link down

International Investment Report

5155 words - 21 pages , 2013) Local financing options for the expansion According to the Energy Sector Management Assistance Program, there are significant uncertainties exist for those looking to enter into a banking relationship in Nigeria. While some form of financing in terms of loan and or equity a necessity, the banking industry does have some risk. Nigerian institutions (public) have a negative history in settling their bills, either due to low or late

strategic cost management and strategic business analysis

3696 words - 15 pages Introduction The purpose of this assignment is discuss the tools and techniques that were covered in the strategic cost management and strategic business analysis and how both tools and techniques to help the senior management in my organization to enhance its corporate value. ABC oil company was my previous employer since when I was in UK but in order to preserve confidentiality, the chosen organization and related brand names will be

Business Combination

3333 words - 14 pages 2/8/2016 Problems and Prospects for Modern Business Enterprises of Bangladesh Submitted to: Dr. Sabnam Jahan Associate Professor Department of Management University of Dhaka. Submitted by: Abul Kalam Azad EMBA Student code: 3-16-32-063 Course code & Title: EM: 501 Introduction to Business Abul Kalam Azad BANGLADESH POLICE Table of Contents Introduction

Corporate Sustainability

5144 words - 21 pages : Changes in the global economy (rise of emerging markets, demographic shifts, technological advances, etc.) heighten the importance of sustainability practices that increase organisational resilience and ensure companies’ long-term competitiveness. Adoption of Corporate Sustainability   Adoption of corporate sustainability varies significantly by industry. A new study by MIT Sloan Management Review (Knut Balagopal et al, “The Second Annual

Can You Fight Poverty with a 5-Star Hotel?

4533 words - 19 pages Development Planning Commission, told me she doesn’t think of the IFC’s investments “as fighting poverty. Just because some people are employed, it is hard to say that is poverty reduction.” But the policies continue. Why? Tycoons and megacompanies offer relatively low risk and generally assured returns for the IFC, allowing it to reinvest the earnings in more such projects. Only a portion of this money ends up benefiting local workers, and critics

Industry Analysis: Soft Drinks

5399 words - 22 pages Industry Analysis: Soft Drinks Meghan Deichert, Meghan Ellenbecker, Emily Klehr, Leslie Pesarchick, & Kelly Ziegler Strategic Management in a Global Context February 22, 2006 Industry Analysis: Soft Drinks Barbara Murray (2006c) explained the soft drink industry by stating, “For years the story in the nonalcoholic sector centered on the power struggle between…Coke and Pepsi. But as the pop fight has topped out, the industry's giants have

Related Essays

Marketing Manager Essay

1034 words - 5 pages Green technology they show the public they are ecologically concerned. References Tiger2 Productions (2011) Barton, T.L., Shenkir, W.G. & Walker, P.L. (2002). Making enterprise risk management pay off: How leading companies implement risk management. (2011) Making More Suitable Choices Retrieved from

Caltex Essay

6973 words - 28 pages Risk Committee • OHS & Environmental Risk Charter Oversight through reporting • External auditors External Auditor Policy • Internal Audit • Board Charter • Board Tenure Policy • Board Composition, Appointment, Induction & Election • Charter of Director Independence • Delegation of Authority • Performance Evaluation Process • Policy for Transactions with Chevron • Risk Management Summary • Continuous Disclosure Policy

Stock Investment Analysis

1881 words - 8 pages most favorable portfolio presumption, which uses volatility to ascertain risk and states a rule for deciding how much of a fund's volatility has a better chance of giving you the most return. “Risk management is best defined as the management of risk over a specified time period in situations where volatility exists and managers have the opportunity to change the expected cash flows. If managers cannot change the expected cash flows, there would

Business Ethics Essay

4205 words - 17 pages digital knowledge objects. As we know that, how implementation KMS at Chevron. Chevron Corporation is an American multinational energy corporation. Chevron implemented a KMS system with comprised an Organizational Learning System to help with the drilling of wells, a document management system and a best practices knowledge base. 5. Conclusion A prefect plan of business process will create or develop the business with successful. Besides