60 Woodside Petroleum Ltd|Annual Report 2018

RISK

Woodside maintains a robust and disciplined

focus on operational excellence and eective

risk management. We do this so that we better

understand uncertainty and manage risks, to help

achieve our objectives.

Our risk management process is designed to recognise and

manage risks that have the potential to materially impact on

Woodside’s short- and long-term business objectives. This

process is aligned to the international standard 1SO31000 for

risk management and assesses potential risks in areas such

as health and safety, environment, ﬁnance and economic,

reputation and brand, legal and compliance and social and

cultural consequences.

Refer to the Sustainable Development Report 2018 for

more information on sustainability issues of importance

to our stakeholders and our business.

Refer to Woodside’s Corporate Governance Statement

for more information (www.woodside.com.au/

Working-Sustainably/governance-and-compliance).

CONTEXT RISK MITIGATION

Our future growth

depends on our ability to

identify, acquire, explore

and develop reserves.

Unsuccessful exploration and renewal of

upstream resources may impede delivery of

our strategy.

Exposure to reserve depletion is addressed

by our exploration strategy together

with our capability in geosciences and

deep-water exploration. Our disciplined

management of opportunities and

acquisitions, together with the application

of new technologies and recovery

processes, further addresses this risk.

Commercial transactions undertaken with the

objective of growing or divesting Woodside’s

portfolio incur many risks that may impact

the ability to deliver anticipated value. These

include sub-optimal commercial outcomes; the

imposition of unfavorable (or change in) ﬁscal

conditions, obligations or liabilities; and operational

performance of assets not meeting expectations.

Our commercial processes are designed

to reduce the likelihood of these risks

materialising as a result of a commercial

transaction. We focus on maintaining a

disciplined approach to ensure that we

continue to increase shareholder value

and appropriately manage risk.

Ecient and

cost-competitive

commercialisation

of hydrocarbons is a

contributor to our success.

Failure to prioritise, invest in, and successfully

commercialise our hydrocarbon opportunities to

meet our corporate strategy may reduce the value

we can secure from future developments and

negatively impact our ﬁnancial performance.

Central to the management of this risk is

our focus on creating eective commercial

arrangements with a range of participants,

stakeholders and contractors.

In addition, we continue to invest in robust

and high-quality opportunity development

and project management systems.

We undertake resource planning and

management to support the demands

of a growing, fast-paced and diverse

development portfolio, with ongoing

review of the mix of capability for each

opportunity phase and capacity to deploy.

Failure to deliver on major capital project FID

commitments through poor project execution

performance may negatively impact our

ﬁnancial performance.

Failure to negotiate, opitimise and ﬁnalise

commercial agreements with key stakeholders

may impact Woodside’s current and future

opportunity portfolio.