Examples of management of specific business risks, and the systems Santos has in place to manage these risks, include the following:
|Type of risk
||Method of management|
|Environmental and safety risk is managed through:|
• a comprehensive Environmental Health and Safety Management System based on Australian Standard 4801 and International Standard 14001;
• environment, health and safety committees at Board and Management levels;
• the retention of specialist environmental, health and safety staff and advisors;
• regular internal and external environmental, health and safety audits; and
• imposing environmental care and health and safety accountability as line management responsibilities.
|Exploration risk and uncertainty is managed through:|
• internal control systems which include formalised risk and resource assessment of exploration prospects;
• corporate review in both prospect and hindsight; and
• Board approval of exploration budgets.
The Company has a Reserves Management System that is consistent with the Society of Petroleum Engineers Petroleum Resources Management System. External reserves reviews and audits are also undertaken as necessary.
||The Company has clearly defined procedures for capital allocation and expenditure. These include:|
• a portfolio management system;
• annual budgets;
• detailed appraisal and review procedures;
• project management processes;
• levels of authority; and
• due diligence requirements where assets are being acquired.
|• A comprehensive budgeting system exists with an annual budget approved by the Board.|
• Monthly actual results are reported against budget and quarterly forecasts for the year are prepared and reported to the Board.
• Treasury operations are subject to a comprehensive system of internal control, and speculative transactions are prohibited.
• Further details relating to financial instruments and commodity price risk management are included in Note 38 to the Consolidated Financial Statements.
||• All significant areas of Company operations are subject to regular reporting to the Board.|
• The Board receives regular reports on the performance of each functional area, including: operations; gas marketing and commercialisation; liquids marketing; legal and secretariat; geoscience, exploration and new ventures; development; finance; safety; human resources; government; investor relations; climate change, sustainability, cultural heritage and other environmental matters.