BP 2009 Annual Report Download - page 72

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BP Annual Report and Accounts 2009
Board performance and biographies
Delegation
Ernst & Young
Internal audit
Finance function
General counsel
External market
and reputation
research
Independent expert
Accountability
• BP goal
• Governance process
• Delegation model
• Executive limitations
Delegation
Accountability
GCE’s delegations
Group chief executive
Monitoring,
Information and
Assurance
Safety & Operations
function
Delegation of authority
Group compliance through policy with
offi cer monitoring
Assurance through
Independent advice monitoring and reporting
Executive management
(if requested)
BP Board Governance
Principles
RCM GPC GDC GFRC GORC
Resource Group people Group Group Group
commitments committee disclosures financial risk operations risk
meeting committee committee committee
Owners/shareholders
Board
Chairman’s Audit
Nomination Remuneration committee committee
committee committee
BP governance framework
Nomination Remuneration Chairman’s SEEAC Audit
committee committee committee committee
Annual plan / Group risks / Strategy
GCE update and business reviews
The group chief executive provides a written report to each meeting of
the board which gives an update on key issues relating to safety and
integrity, operations, financial performance and the market in which
BP’s businesses operate. These are complemented by verbal updates
given by executive directors on material matters which have arisen in
their business.
Periodic reviews of the business are scheduled throughout the
year. During 2009, reviews were held with both segments (Exploration
and Production and Refining and Marketing) and with Alternative Energy.
Country specific reports
Separate to the business specific reports, the board discussed the
performance, political landscape and market outlook relating to BP’s
operations, particularly in the US and Russia.
Functional reviews
The work of the group technology function was reviewed and discussions
were held on issues relating to information technology and services.
Financial and corporate reporting
The board considered the group’s statutory reports and the broader
aspects of corporate reporting. It also received regular updates on the
group’s financial outlook as well as discussing the financial results.
An annual review of the group’s process for sanctioning capital
investment is undertaken by the board. This includes examining case
studies of BP projects with different levels of complexity and
understanding the effectiveness of project delivery against original
sanction.
Other matters
Other matters discussed by the board included the BP brand and
corporate advertising, the results of the group-wide employee
satisfaction survey and an annual report evaluating BP’s external
reputation in the UK and US.
The board also received a presentation from the independent expert
appointed to provide an objective assessment of the BP US Refineries
Independent Safety Review Panel (the panel). Further details on the
activities of the independent expert are outlined in the report of the
safety, ethics and environment assurance committee below.
Risk management and internal control
The board and its committees monitor the identification and
management of the group’s risks and the board reviews how group-level
risks and their mitigations are embedded in the c ompany’s annual plan.
Geopolitical and reputational risks are considered by all the board which
also receives reports from the committees to whom specific risk
oversight has been allocated. The audit committee monitors financial risk
whilst the safety, ethics and environment assurance committee (SEEAC)
monitors non-financial risk; the audit committee and SEEAC hold an
annual joint meeting to assess the effectiveness of the company’s
internal controls and risk management. Like BP’s other board
committees, the audit committee and SEEAC are composed entirely
of independent non-executive directors.
The audit committee and SEEAC maintain a forward-looking
approach to risk exposure. A high level work programme for the board
and its committees is set on the basis of an agenda that reflects the
board’s core tasks and the key group risks.
The group chief executive and his senior team are supported by
executive-level sub-committees which monitor specific group risks: these
committees comprise the group operations risk committee (GORC), the
group financial risk committee (GFRC), the group people committee
(GPC), the resource commitments meeting (RCM) and the group
disclosures committee (GDC). They provide input and data to the risk
oversight process by the executive, as well as external and internal audit,
the group’s compliance and ethics officer, safety and operations audit
and group controls.
Further information about our internal control systems is set out
on pages 20, 74 and 105.