Executive Summary
The executive report provides a critical evaluation of Chevron’s current approach to strategic risk management. The main objectives of the report included; provide a brief introduction of Chevron, and the industry in which it operates, to set the scene for the reader, and examine the current approach taken by the Chevron with regard to strategic risk management, in the context of the following three risk areas: Health and Safety, Environmental and Socio-Political. Others were identifying if the Chevron’s current approach to management is an independent or integrated one. Critically evaluate both approaches, and propose which approach would be most beneficial to the Chevron. In addition, the report sought to critically evaluate Chevron’s current approach to corporate social responsibility, ethics and business continuity and propose a future approach to risk management and business continuity. The findings of the report depict that the organisation’s approach to strategic risk management is driven by health, environment and safety (HES) risk management process in addition to an Operational Excellence Management System (OEMS). Moreover, the company utilises an integrated approach to management. Climate change and sustainability efforts are critical drivers of Chevron’s corporate social responsibility, ethics, and business continuity. The reports recommendation is that the company should continue with its current approach to risk management and business continuity.

Table of Contents
Executive Summary 2
Introduction 4
Aim 4
Report objectives 4
Company background and the Future Growth Project 5
Critical discussion 7
Strategic risk management approach 7
Approach to management 12
Approach to corporate social responsibility, ethics and business continuity 14
Future approach to risk management and business continuity 16
Conclusion 17
Recommendations 18
References 19

Introduction
The purpose of this executive report is providing a critical evaluation of an organisation’s current approach to strategic risk management. In this particular case, the firm evaluated is Chevron in particular its involvement in the Future Growth Project (FGP). The report has been divided into numerous sections. The first section entails the introduction that contains the aim of the report, the report objectives and the background of the company. The second section provides for a critical discussion in particular the firms strategic risk management approach, approach to management, approach to corporate social responsibility, ethics and business continuity and future approach to risk management and business continuity. In assessment of the company’s strategic risk management, the specific areas discussed include health and safety, environmental, and socio-political. Further, Chevron’s approach to management has been discussed through independent and integrated approaches. The final section of the report consists of a conclusion and recommendation.
Aim
The aim of the report is to provide a critical evaluation of Chevron’s current approach to strategic risk management.
Report objectives
The following are the specific report objectives:
• To provide a brief introduction of Chevron, and the industry in which it operates, to set the scene for the reader
• To examine the current approach taken by the Chevron with regard to strategic risk management, in the context of the following three risk areas: Health and Safety, Environmental and Socio-Political
• To identify if Chevron’s current approach to management is an independent or integrated one. Critically evaluate both approaches, and propose which approach would be most beneficial to the Chevron
• To critically evaluate Chevron’s current approach to corporate social responsibility, ethics and business continuity
• To propose a future approach to risk management and business continuity

Company background and the Future Growth Project
Chevron Corporation is a multinational energy firm that originates from the United States operating within the Oil and Gas industry. The company has its headquarters in San Ramon, California and offers services and products in approximately 180 nations globally. The company operates in other industries including geothermal energy, which includes hydrocarbon production and exploration, refinement, transport and marketing, chemical manufacturing and selling, as well as generation of power. The firm is among the worlds largest as of 2017 it appeared 16th in Fortune Global 500. The downstream operations of Chevron do manufacturing and selling of lubricants, fuels, petrochemicals, and additives. The alternative energy operations of the organisation include biofuel, solar, wind, geothermal and hydrogen. Some of the areas where the company has set significant operations include west coast of North America, Southeast Asia, the Gulf Coast of the United States, South Africa, Australia, and South Korea. Today, it is estimated that the company employs approximately 62,000 people of whom half are within the United States. In the year 2017, the company’s returns were improved through further reduction of expenses and generation of more revenues. The net income in 2017 was $9.2 billion (Chevron. 2017). The priorities of the company in 2017 were: completion of projects under construction, reduction of capital spending and operate in a reliable and safe manner. In the course of doing its operations, the firm has been involved in a number of controversies among them the environmental damage in Ecuador where the residents accused the firm of damaging forests in addition to making people fall ill as they lacked a concrete environmental remediation. In Angola, the company was also involved in a dispute of oil spills. Chevron has been involved in more disputes in different parts of the world. Nonetheless, the management of the company has learnt from experience and has developed more stringent risk management policies to avoid further legal disputes and avoidable compensations.
Among the development projects that Chevron is engaged in is the Tengiz Future Growth Project (FGP) a project developed purposely to have the production capacity of increased (Crooks, and Farchy, 2016). Upon completion of the project, the production of oil in Tengiz will increase by 260,000 barrels a day translating into 12 million tonnes annually while the gas production will also rise by 960 million standard cubic feet a day (Hydrocarbons Technology 2018). The FGP project is developed and owned by Tengizchevroil (TCO) a joint venture (JV) that consists Exxon Mobil (25%) Chevron (50%), LukArco (5%) and KazMunayGas (20%). The production has been estimated to begin by early 2022 as the pre-construction was up and running from 2013 and the final decision to invest made in 2016. According to estimates, the project will generate nearly 20,000 jobs during the phase of construction while in the long-term 500 jobs in particular during the phase of operation (Baidaliev, 2014). The total cost of the project will be about $ 36.8 billion including $27.1 billion for facilities, $6.2 billion for escalation and contingency, and $3.5 billion for wells. Today, Chevron is the globe’s leading energy companies that are integrated (Dittrick, 2016). Using the many subsidiaries the company has around the universe, Chevron is involved in all facet within the energy industry. Currently, Chevron is the largest private oil producer in Kazakhstan. In the new project, there will be development of 15 gas injection wells and 106 new production wells. More so, the project will use the infrastructure that exists including the power generation facilities, facilities for waste management, reception facilities and sour water stripper among others (Hydrocarbons Technology 2018).
Critical discussion
Strategic risk management approach
According to Frigo, and Anderson, (2011) strategic risk management is defined as the process for identification, assessment and management of uncertainties and risks, affected by external and internal scenarios or events that could impact on an organisation’s ability to achieve the strategic objectives. Moreover, the ultimate goal of strategic risk management is protection and creation of stakeholder and shareholder value. Frigo, and Anderson, (2011) states that a successful strategic risk management approach should have specific steps or practices. The first step involves consideration or seeking an understanding of a firm’s strategic risks and related processes for risk management. At this point, it is important for a company to develop an action plan. The second step entails conducting a strategic risk assessment for purposes of prioritizing the risks to resolve, both external and internal. The third step is about reviewing the process with an aim for strategy setting which should include identifying the related risks (Frigo, and Anderson, 2011). Th fourth step is about putting in place mechanisms that measure and monitor the performance of the firm. Here, the key performance indicators should be related to the identified strategic risks. The final step is development of a process that is ongoing to ensure periodical updates strategic risk assessment (Frigo, and Anderson, 2011).
At Chevron Corporation, the company has developed a structured approach enterprise risk management that has been aligned to ISO31000 and at the same time consistent with the best practices of the industry the Committee of Sponsoring Organizations of the Treadway Commission (COSO) framework. Enterprise risk management is a “process influence by an organization’s management, board of directors and other people, applied within a strategic setting and everywhere in a business, developed to recognize possible events which might impact the firm, and ensure the risk is in its manageable level, provide assurances that are reasonable in terms of achievement of the company’s objectives. (Frigo, and Anderson, 2011, p.1).” Strategic risk management is a necessary foundation and critical component of enterprise risk management. At Chevron, the assessment of risks is done across the scope of the business touching all categories and address aspects such as financial, operational, strategic, legal, and stakeholder among others. In each of the categorised risk, the company has employed a senior management risk owner who is tasked with assessment generation and reporting on the mechanisms put in place to manage the risks. In the effort to ensure effectiveness of risk management, the company has invested in an ample health, environment and safety (HES) risk management process (Bruney, 2014).
First, the HES risk management processes is about ensuring that there are zero incidents related to health and safety, environment, or socio-political aspects. First, in relation to health and safety, Chevron shows commitment through helping contractors and employees stay healthy and safe. Under the current FGP project which will involve thousands of employees and hundreds of contractors before completion, minimizing the possible risks related to health and safety will be significant for the organisation. The company acknowledges that there is no work in particular construction in the oil and gas industry which lacks risks. Nonetheless, to identify the health and safety risks in a project such as FGP, the firm uses Operational Excellence Management System (OEMS). This is a safety policy which is proactive in terms of ensuring consistent training the company’s workforce, while contractors and employees are empowered with responsibility and authority to stop working if they feel that the conditions are unsafe (Chevron, 2018). Apart from this, in a region where the project is situated, the company provides health education programs for health awareness to the residents of the various communities, and to the workers and those who depend on them. The safety and health of the workforce is a core value of Chevron. Through the OEMS, the company is able to identify, assess, prioritize, and manage operation excellence risks. The firm has also invested in a Repetitive Stress Injury Prevention (RSIP) Plan that seeks to address repetitive stress injuries. To depict the organisations commitment to addressing present and future risks related to safety and health of employees Chevron has received numerous global awards (Chevron, 2018). Currently, at Kazakhstan where the FGP project is located, employees continue to get threats from the local communities. This is a safety concern that the company has been seeking to resolve as it puts into jeopardy bringing experienced professionals to work on the project. Previously, the project was put on hold due to unresolved issues that the organisation felt threatened the safety of its workers. Nonetheless, through the proactive approach to risk management, employees face limited safety risks as a large percentage of the local communities’ population have embraced the project.
Secondly, in relation to environmental risk, Chevron has put in place significant strategies to address this imminent risk. The environmental risk has been referred to as the possibility of degradation due to human activities. In the past Chevron has not been immune to controversies related to environment risks specifically oil spillage. The FGP project is a large project and will require the company to invest huge resources to avoid degradation of the environment. Operations related to oil and gas are in almost every part of the globe and place significant pressures on local inhabitants and environment. Ironically, as the universal population continues to increase, the demand for useable resources and energy is also rising. Therefore, for many firms such as Chevron operating in the Oil and Gas industry, the challenge has been to meet the growing demand for energy while at the same time ensuring that reduction in negative externalities particularly on the environment. In the past, it has been revealed that the exploration of oil and gas threatens to destroy habitats, produce air emissions that are harmful and cause loss of biodiversity (Chevron 2014). Oil spills and incidents can result into groundwater and soil contamination in addition to freshwater and marine discharges. When these incidents occur, the damages vary depending on the stage of operation and the location. Thus, firms operating within this industry are required to incorporate environmental concerns within their normal operations. Internationally, there has been development of declarations, frameworks as well as treaties that seek to combat challenges linked to environment protection. However, none of these international agreements has been successful in compelling companies in the oil and gas sector to effectively manage the impact they have on the environment. Among the reasons for failure of these treaties and frameworks is because some of the countries fail to adopt them. In relation to Chevron, the company faces critical risks in seeking to complete the FGP project. When the oil is mishandled during any production phase, the natural environment can be adversely affected in addition to impacting on the human health and profitability of the firm. In many of the sites including the FGP project, atmospheric pollution is a significant issue in addition to accidents. To improve the performance on the environment however, the firm has spent heavily. Through ought the years, Chevron has attempted to portray itself as an organisation that is committed to protecting the environment. The company’s environmental risk management is considered as a tool that is important in reducing the magnitude and probability of the accidents. Having good performance in matters related to the environment strengthens the reputation of the brand. Chevron has invested in proactive environmental initiatives both at present plants such as FGP project and within the sites that have been discontinued. The company does voluntary clean up which it insists if more flexible than relying on instructions provided by regulatory authorities in different countries. The company has been using internal mechanisms to guide on environmental management across the firm’s global system. The company goes beyond regulatory compliance by emphasising the use of innovation and creative solutions in gaining a strong competitive advantage. The company has been investing in employee education and training to help them gain attitudes and skills that are critical in managing issues related to the environment in an intelligent manner. The firm has tied its promotional process to environmental performance. The internal risk management processes have been critical in substantially reducing the cost of environmental mishaps.
Finally, in the oil and gas industry, socio-political risks are inherent and it is always critical to assess them before making investments. The success of development projects has been largely tied to having a knowledgeable background of the social and political context particularly those that attract controversy and have concerns related to the environment or border issues (Mitchell, Santi, and Lichtenberg, 2005). In the case of FGP projects, there is a critical political risk that is involved. In addition, socially, because of the magnitude of the project in terms of barrels to be produced, Chevron faces societal risks. Due to the political conditions at Kazakhstan that continue evolving, the operations of the company in the area face imminent risks. Some of the risks mainly include royalties and taxes, forced increase in public ownership, as well as threats towards the safety of the employees. Much of the delays in the FGP project were caused by power shifts between groups and governing branches. Nonetheless, today, there is stability and hence the start of the project (Miller, 2017). The current regime of Kazakhstan can be described as authoritarian with allegations and instances of corruption and violations of human rights. The interesting thing about the regime is that dissent associated with foreign investment and foreign workers is suppressed. At the same time, the political leaders of Kazakhstan have largely suppressed religious extremism that means that there are only limited attacks (Miller, 2017). Thus, while current the socio-political risks have been minimised, they remain forthcoming considering the worth of the project being undertaken.
Approach to management
Chevron’s approach to management is mainly integrated. Often, the company refers itself as an integrated energy company referring to an organisation that is engaged in many aspects of the energy industry including exploration and production of natural gas and crude oil, refinement and transportation of the oil, refined products, and natural gas in addition to power generation. Thus, the decision making of the top management is lead by an integrated approach. Integrated management is different from an independent approach. Integrated approach is understood to recognise connectivity and nonlinear processes between problems. In the context of management, integrated approach encompasses effective direction of every component of the firm so to ensure the expectations and needs of all involved stakeholders are satisfied in an equitable manner by best utilisation of the available resources. Some of the features of an integrated approach to management include decision making which values consensus, optimal efficiency within the operations of the firm, and having co-existence of both diversity and uniformity within the available systems (Bizikova, Swanson, and Roy 2011). The integrated approach to management is cross-disciplinary and holistic in terms of balancing the potential losses and gains. An organisation that uses the integrated approach to management emphasises coherence among the different business functions in addition to harmony among the employees, natural environment, and society. Integrated management approach combines efforts of groups and individuals in such a way that unity is achieved while at the same time ensuring these efforts are unified into a larger coherence (Dalling 2007). The aim of integrated management is promoting equilibrium between the interconnected spheres specifically the environment, society, and the organisation. An organisation that use integrated management approach utilises existing and new managerial tools and concepts while emphasising on the stakeholder culture, systemic processes, emotional intelligence, and real-world leadership. In companies that are contemporary in nature, and adopt this type of management, the approach is considered as a strategy to reconcile cross-functional challenges that are complex. Importantly, integrated practices foster flexibility and open-mindedness in communities and individuals (Bizikova et al. 2011). Moreover, this approach promotes context-sensitive approach to understanding organisations, systems and individuals.
The independent approach to management on the other hand varies from the integrated approach in a number of things. First, the decision-making does not consider the input or issues from outside. Thus, the management seeks to make decisions based on their knowledge and understanding. Independent management approach emphasis on personal inputs from the people tasked with authority. The major difference with integrated approach is that while the later seeks to find out the challenges facing other stakeholders before making decisions, independent management assumes that they know what others need and hence no need for consultation. Moreover, the business under this approach is managed as a sole proprietorship company where the owners are in direct control of every aspect and legally accountable of finances including loss, debts, and loans among others.
Considering that the approach that Chevron has chosen is integrated management as seen from its annual report, this is the most preferred method in terms of the benefits. First, the organisation has been practising this approach to management that means the managers have more experience and knowledge on how it operates. Chevron is a large organisation operating in different countries around the globe and exploring various fields within the oil and gas industry. Therefore, it makes sense for the company to continue using the integrated approach as it suites the current operations. Important, it brings flexibility within the organisation and improves how the firm deals with issues relating to risk management.
Approach to corporate social responsibility, ethics and business continuity
Corporate social responsibility has been defined in different ways. Mainly, CSR has been defined as the commitment that organisation shows in risk minimization, benefit maximization as well as being responsible and accountable to the stakeholders (Krell, 2006). Motives of setting up CSR programs differ depending on the approach of the organisation. The main approach that Chevron undertakes in relation to corporate social responsibility is conducting its business in an environmentally and socially responsible way, respecting the universal human rights and law for the benefit of the numerous communities where the company operates (Chevron 2018). Over the years, Chevron has strived to focus on environmental and societal issues having a direct effect on the society while at the same time being relevant to the business the firm conducts. The company’s sustainability approach recognises that the success of the firm and sustainable development of the different communities where Chevron operates are interlinked. Due to the nature of the business that the company is involved in, it means that operations are in environments that face many social challenges such as endemic poverty. As a result, the company partners with development agencies like the United Nations to bring a positive change to the people living in these communities (Garrigo, 2011). Chevron has a social investment strategy that seeks to offer support to local growth of the economy and development of the workforce (Chevron, 2018). Additionally, one of the significant company’s sustainability approach is related to climate change. The organisation recognises that their products are carbon intensive and due to this, it seeks to look for methods that can reduce their own footprint that eventually aids in reducing the level of carbon in the fuels produced. In the different countries where the company operates globally, Chevron have been investing in renewable sources of energy, increased efforts towards efficient utilisation of energy, and invested in research and development for purposes of developing innovative energy technologies.
Secondly, Chevron’s approach to ethics is guided by the company’s business conduct and ethics code built on the firms core values (Chevron, 2018). The company supports ethical decision making as it is critical to achieving relevant success. The firm realises that having accurate and fair records and books is essential in management of the business operations. Thus, the books of accounts and records should be prepared honestly and accurately. The firm has put in place internal controls as well as auditing systems that make it easier to detect fraudulent activities by either employees or contractors. As an ethical practice, the company seeks to avoid conflicts of interests that means that employees decision making should be always act within the best business interests. In addition, compliance with international, antibribery, and antiboycott laws is essential in all countries where the company operates. Apart from this, in relation to involvement in politics, the organisation always ensures that participation is guided by the highest ethical standards. Thus, Chevrons approach to ethics is that of trust and integrity, being honest and honouring commitments (Chevron 2018). Nevertheless, despite the strong ethical code of conduct, the company has previously been involved in numerous unethical behaviours including cases of oil contamination an example being in Ecuador animals and humans in the Amazon rain forest used supplies that were contaminated. Therefore, the company needs to do more on how it approaches issues related to ethics.
Finally, in relation to business continuity approach, Chevron has put in place a business continuity plan that is developed to provide an orderly recommencement of usual functions and operations following a disaster or event that causes disruptions. The company has a tiered approach in dealing with emergency issues. For example, there is a corporate emergency team responsible for providing expertise and guidance on how to respond to the emergency, management of the crisis in addition to business continuity.
Future approach to risk management and business continuity
The current approach to risk management and business continuity that Chevron adopts can be considered as strategic and proactive. Therefore, moving forward towards the future, the strategic approach stands to be the most appropriate amid several adjustments. Globally, the company has had to deal with numerous challenges that damage the reputation of the organisation and to some extent negatively affects its operations globally. The management of the organisation should invest more in strategic management of risks by providing employees and contractors with relevant training and knowledge on how to prepare and deal with risks when they occur. When a company faces serious risks repeatedly, the survival of the firm is risked. Nonetheless, having a risk management strategy that is effective minimises the exposure while at the same time facilitates adequate planning for purposes of business continuity. Therefore, ensuring effectiveness in the current approach to risk management will ensure identification of risks and mitigation. Eventually, the business continuity plan will focus on those threats that emanate from outside and the organisation has no control over them. Importantly, mitigation of risks effects makes the business operations more secure and gives the contractors, suppliers, employees, and customers’ confidence that the organisation can be relied upon.
Conclusion
In conclusion, Chevron operates in an industry that is challenging. Consequently, the risks are numerous and require adequate plans and approaches to ensure that they are mitigated to the satisfaction of all stakeholders. Currently, Chevron has invested huge resources on reducing risks related to health and safety, environment, and socio-political aspects not only in the FGP project in Kazakhstan but also in various sites around the globe. In particular, the company has developed a health, environment and safety (HES) risk management process in addition to an Operational Excellence Management System (OEMS) that seeks to reduce the nature of the risks that the company faces. The integrated approach to management can be said to have played a bigger role in how the company proactively manages risks in various sites across the world. Due to the nature of the business that Chevron is involved in, the approach to corporate social responsibility, ethics, and business continuity has been that of sustainability and climate change. Despite the approaches in place, the company has been involved in unethical behaviours in particular oil contamination. Thus, the management of Chevron needs to do more in addressing its challenges.
Recommendations
As stated above, it is recommended that the company should keep its current approach on risk management and business continuity. Largely, the approach is proactive and has been critical in dealing with risks facing the organisation in different parts of the world. However, more resources are required specifically in raising awareness among employees on strategic risk management.

References

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Bizikova, L., Swanson, D., and Roy, D., 2011. “Evaluation of Integrated Management Initiatives”, International Institute for Sustainable Development.
Bruney, J., 2014. Risk Management at Chevron. AIChE/SACHE Workshop.
Chevron. 2014. 2013 Corporate Sustainability Report. [Online]. Available athttp://www.chevron.com/documents/Pdf/CorporateResponsibility/Chevron_CR_Report_[Accessed 30th June 2018]
Chevron. 2017. Annual Report 2017. [Online] Available at https://www.chevron.com/annual-report[Accessed 26th June 2018]
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Dalling, W., 2007. Integrated management definition: Chartered quality institute integrated management special interest group. Issue 2.1.
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