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Strategy
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Risk management and corporate governance
Good corporate governance practices are a pillar that supports our business. Our activities are guided by ethics, integrity, and transparency.
We also believe that integrated and proactive risk management is essential for delivering safe and sustainable results. The fundamental principles of our Corporate Risk Management Policy are respect for life in all its diversity, ethical performance in compliance with legal and regulatory requirements, as well as full alignment and consistency with our strategic plan. Risk management is integrated with the guidance of risk response actions that consider the possible impacts on our stakeholders and aimed at adding or preserving shareholder value and business continuity.
Risk management
Our risk management process is coordinated by a corporate area, allowing the standardization and uniformization of our risk analyses and the management of risk responsibilities, which are structured according to a model with three lines. In this model, each group of managers that make up the lines plays a distinct role in the governance structure. This presupposes a set of continuous and integrated activities, supported by a structure that comprises, in practice, the Board of Directors, the Executive Board, members of the general structure and all employees, service providers, and other involved parties.
The organizational units, in conjunction with the Executive Risk Management Department, are responsible for the identification, assessment and treatment of risks. Strategic risks are reported quarterly to the Executive Committe - Risk, Executive Board, Statutory Audit Committee and to the Board of Directors, and high and very high risks are reported monthly to the Statutory Audit Committee. The effectiveness of the risk management process is assessed by the Internal Auditors, a body directly subordinated to the Board of Directors.
Material topic |
Main associated events and risk factors[1] |
Economic impacts |
Differing interpretations and new requirements from regulatory agencies in the company's industry related to, for example, royalties and government participation |
Business integrity |
Failure to prevent, detect in a timely manner, or correct behaviors that are inconsistent with our principles ethics and rules of conduct
Violation of human rights in our operations, whether in our workforce, in the communities where we operate, or in our supply chain |
Climate resilience, GHG emissions and other gases |
Energy transition: Market, regulatory, legal, reputational, and technological risks
Greater demands regarding the transparency of actions related to the transition to low carbon
Fuel restrictions related to pollutant emission levels |
Accident prevention and management |
Safety, environmental and health risks in our operations and facilities, such as oil spills, product leakage, fires and explosions
Intentional acts such as clandestine diversion, crime, theft, sabotage, roadblocks, and protests |
Biodiversity |
Fluid/hydrocarbon spills and leaks that impact biodiversity |
Water and effluents |
Water scarcity events and difficulties in obtaining grants for the right to use water resources
Fluid/hydrocarbon spills and leaks that impact water resources. |
Waste management and decommissioning |
Increased regulatory requirements and stakeholder expectations related to decommissioning projects |
Local and traditional communities |
Expectations and dynamics of the communities where we operate
|
Labor practices and equality of opportunity |
Difficulties in attracting, developing and retaining people with the necessary skills and training could negatively impact the implementation of our strategy
Strikes, labor stoppages or claims by our employees or by employees of our suppliers, contracted companies, or in other sectors
Obligations related to our pension and medical care plan |
Safety, health, and well-being |
Epidemics and pandemics in public health
Differing interpretations and environmental regulations for health and safety, as well as industry standards that are becoming more stringent |
[1] Emerging risks are highlighted in the following section and are not part of this list.
Emerging risks
Emerging risks are new long-term risks arising from external factors, where we have identified a potential for a significant impact on a large part of our operations and which may require adaptations to our strategy. We highlight below some highly relevant emerging risks:
- Energy transition risk
- Physical risks of climate change
- Geopolitical conflicts
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