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The oil and gas industry is inherently high risk and this requires a dynamic approach to identifying, evaluating and mitigating a broad range of technical and non-technical risks.
Strong and effective risk management is central to how we run our business. It supports the achievement of our strategic objectives and protects our business, our people and our reputation. It also enables us to safeguard the communities and the environments we work within and to develop long-term relationships with host governments. Identifying, understanding and mitigating the risks we face, whilst being able to maximise the value from business opportunities, supports effective decision making at an asset, business unit, regional and strategic level. Responding quickly when risks crystallise to mitigate their impact is also a key element of our risk management process.
The Board is collectively responsible for risk management and each Executive Director is responsible for designated risks. Regional Business Managers and the Business Unit organisations are responsible for managing day-to-day operations and the safe delivery of the Group's business plan. Corporate functions are responsible for managing designated Group-wide corporate risks and providing oversight, together with regional business management, of Business Unit activities and operational and financial performance. Risk identification and progress in implementing risk mitigation are reported regularly to the Board. In this way, it is clear whether risk mitigation has been achieved, is in progress, or whether risk has escalated and requires immediate attention. This validates progress being made in mitigating risk throughout the year as well as identifying new risks and refining mitigation processes in line with changes in the external operating environment. Overall this approach ensures that Tullow is actively managing risk in a transparent and accountable way.
Tullow has detailed policies, standards, procedures and systems in place to support risk management across the Group. These include the Code of Business Conduct, Human Resources (HR) and EHS policies, ISO14001 certification of the Group's Environmental Management System, supply chain management, asset protection standards and processes and crisis management plans. Monthly Board risk reporting is coordinated independently by the Group Internal Audit Manager.
The Board provides oversight of the strategic direction of the business and approves the annual budget and business plan together with risks to delivery and defined operational targets. Key strategic risks and opportunities are also collated as part of the Board's annual review of Group strategy. Board committees, including the Audit Committee, Nominations Committee, Remuneration Committee and EHS Committee (to commence in 2013), play a key role in reviewing the effectiveness of Tullow's risk management.