Woodside Petroleum Ltd|  Corporate 61
CONTEXT RISK MITIGATION
Safe and optimised
production and delivery
of hydrocarbon
products to plan may
influence our licence to
operate and our ability
to achieve superior
shareholder returns.
Sustained, unplanned interruption to production
may impact our licence to operate and financial
performance. Our facilities are subject to operating
hazards associated with major accident events,
cyber-attack, inclement weather and disruption
to supply chain, which can result in a loss of
hydrocarbon containment, diminished production,
additional costs, environmental damage or harm
to our people, reputation or brand.
Our world-class operational performance
is based on an extensive framework of
controls which enable the management
of these risks. This includes production
processes, drilling and completions and
well integrity management processes,
inspection and maintenance procedures and
performance standards. This framework is
supported by the ongoing engagement we
have with regulators.
The integrity, availability and reliability of data
within Woodside’s information technology systems
may be subject to intentional or unintentional
disruption (e.g. cyber security attack).
Our exposure to cyber security risk is managed
by a control framework and the continuing
focus on system control improvements,
supported by an established and embedded
security strategy across the organisation.
Woodside’s financial
strength and
performance may be
impacted by key factors
such as:
+disruption in market
dynamics;
+ability to maintain
competitive
advantage;
+access to capital;
+capital allocation; and
+management of
financial risks.
Commodity prices are variable and are
impacted by global economic factors beyond
Woodside’s control.
Demand for and pricing of our products remain
sensitive to external economic and political
factors, weather, natural disasters, introduction
of new and competing supply, and change within
buyer preferences for diering products and
price regimes.
We are exposed to treasury and financial risks,
including liquidity, changes in interest rates,
fluctuation in foreign exchange and credit risk.
Insucient liquidity to meet financial
commitments and fund growth opportunities
could have a material adverse eect on our
operations and financial performance.
Our financing costs could be aected by interest
rate fluctuations or deterioration in our long-term
investment grade credit rating.
We are exposed to credit risk; our counterparties
could fail or could be unable to meet their
payment and/or performance obligations under
contractual arrangements.
Woodside mitigates the uncertainty
associated with product demand by
selling LNG in a portfolio manner and under
long-term ‘take or pay’ sale agreements,
in addition to the spot market. Our low cost
of production and approach to balance
sheet risk management further mitigate
this exposure.
Woodside maintains a flexible approach
to capital management. The overall level
of investment in the dierent areas of
our business and the investment mix
are adjusted to reflect the external
environment. Our capital management
strategy focuses on capital allocation,
capital discipline and capital eciency.
Woodside maintains insurance in line
with industry practice and sucient to
cover normal operational risks. However,
Woodside is not insured against all potential
risks because not all risks can be insured and
because of constraints on the availability
of commercial insurance in global markets.
Insurance coverage is determined by the
availability of commercial options and
cost/benefit analysis, taking into account
Woodside’s risk management program.
Losses that are not insured could impact
Woodside’s financial performance. For
example, Woodside does not purchase
insurance for the loss of revenue arising
from an operational interruption.
Our extensive framework of financial controls,
including monitoring of counterparties,
enables the management of these risks.
The US dollar reflects the majority of
Woodside’s underlying cash flows and is
used in our financial reporting, reducing
our exposure to currency fluctuations.