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In Kuwait Energy, we believe that the development of a risk management plan and a risk appetite statement (RAS)
are critical elements of an effective risk management strategy. We also believe that risk strategies and mitigation
plans need to be aligned with the Group’s strategies, scorecard and business objectives.
In line with these beliefs, in 2015 we embarked on establishing the foundations for the Group’s Enterprise Risk
Management (ERM) framework. The framework allows for the elevation of risk and compliance management to
a strategic level. This best practice framework mitigates risk from all tangible and non-tangible assets. It is also
intended to set the foundation for Risk Management and Compliance for Kuwait Energy.
Our goal is to link our Company’s strategy and scorecard to our risk management plan and risk appetite. This is in
order to create metrics that enable us to better quantify and relate risks to the achievement of business goals and
hence create a higher chance of business success. We have also established risk management as a responsibility at
every departmental level in the Group.
Looking forward, we will be enhancing our key ERM capabilities with a stronger risk management framework.
Risks, Detailed Risks and Mitigation
For each risk we identified, we have placed detailed mitigation plans.
Strategic risks
Risks with the potential to impact the Group’s ability to create value for shareholders and meet their expectations include:
Identifed Risk Factor
Detailed Risk
Mitigation
Portfolio Balance
A risk would exist when there
is a lack of diversification in the
Company’s portfolio: Oil vs Gas
projects; geographic diversity;
service vs other contract types; big
projects vs small projects; and being
an operator vs non-operator.
Diversify investments geographically. Explore
opportunities in Iran. Put in place a business
plan that balances capital needs with technical
risk and access. Network and establish solid
partnerships and relations within the business
region.
Replacement Reserves
Inability to replace reserves in the
existing concessions.
Iran opportunities, balanced exploration
program in Egypt and increased subsurface
understanding, application of new technologies.
Acquisitions and partnerships where prudent.
Economic Concerns
Lack of sufficient due diligence in
the planning and evaluation for
new investments and inadequate
management of current assets.
Increased emphasis on higher return margins
and greater balance in economic metrics.
Portfolio must be economically as well as
technically balanced.Optimize capital on best
projects.
Geopolitical Instability
Conflicts in Yemen, growing concerns
with regional countries, the Group’s
Portfolio consists of assets in most
volatile region in the world. Growing
Security issues. Terrorism.
Being an indigenous MENA based company
allows for better understanding and cooperation
and acceptance, protect assets, ease of
communication; appropriate security programs.
Additionally, further portfolio geo-balance
and maintaining a pivotal role in regional
relationships via alliances and CSR programs.
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