Kamran Hagverdiyev Hussam Husseini

Outline  Introduction  What is the risk management  Types of risk company faces  Exxonmobil risk management system  Conclusion

 Exxon Mobil Corp., or ExxonMobil, is an American multinational oil and gas corporation headquartered in Irving, Texas, United States.  It is a direct descendant of John D. Rockefeller's Standard Oil company, and was formed on November 30, 1999, by the merger of Exxon and Mobil

The world's 5th largest company by revenue ExxonMobil is also the second largest publicly traded company by market capitalization When ranked by oil and gas reserves, it is 14th in the world—with less than 1 percent of the total.

Why Energy? Gains in living standards over the past two centuries have been enabled in large part by a transition to modern energy sources.

What is Risk Management? Risk Management is the systematic process of identifying, analyzing and managing the types of risk exposure within an organization. Risk Management is the systematic process of identifying, analyzing and managing the types of risk exposure within an organization.

Risk Management Planning output is the “Risk Management Plan” The plan describes how risk identification, qualitative and quantitative analysis, monitoring and control will be structured and performed during the project life cycle.

The risks company facing  Political Risk  Geological Risk  Price Risk  Cost Risks  Financial risk  Physical risk

Political risk  The primary way that politics can affect oil is in the regulatory sense, but it's not necessarily the only way.  Company is covered by a range of regulations that limit where, when and how extraction is done.  Political risk generally increases when company is working on deposits abroad. Political risk

Geological risk  Geological risk refers to both the difficulty of extraction and the possibility that the accessible reserves in any deposit will be smaller than estimated.  Oil and gas geologists work hard to minimize geological risk by testing frequently, so it is rare that estimates are way off.

Price risk  Within a year the price of oil went from over $110 per barrel to under $50 per barrel due to an oversupply of oil.  Though ExxonMobil was able to make a profit, if low prices are to continue for the long-term, Exxon may have to adjust its operations.

Cost Risks  All of these preceding risks feed into the biggest of them all - operational costs  These costs have made oil and gas a very capital-intensive industry, with fewer and fewer players all the time.

Financial Risk  A key strategy to ensure investment selectivity is to maintain a diverse portfolio of oil and gas investment opportunities.  This diversity in terms of resource type, and geographic dispersion is unparalleled in the industry.  The company does not believe current investments in new reserves are exposed to the risk of stranded assets, given the rising global need for energy.

Physical risk  Climate change poses risks related to extreme weather, sea-level rise, temperature extremes, and precipitation changes,  Particularly with respect to future changes in climate, facilities are generally engineered to be resilient to extreme event, with the inclusion of additional safety factors.

Risk management  The geographic and asset diversity of the company’s portfolio further helps to reduce risk and enhance profitability across a wide variety of economic conditions.  Stress testing provides an opportunity to fully consider different economic scenarios in company`s planning an investment process.

Risk management  An important approach that a company takes in mitigating risks is careful analysis and building sustainable relationships with its international oil and gas partners, if it hopes to remain in there for the long run.

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