Energy, Risk & Competitive Advantage: The Information Imperative

Front Matter......Page 2
4.9.4 Other Considerations......Page 0
Introduction......Page 12
Preface......Page 10
Table of Contents......Page 4
1.1 Information Integrity and Corporate Risk Management - The Two are Inseparable......Page 15
1.2 Competently Gathered, Locally Sourced Market Research......Page 17
1.3 Criticality is Key: Understanding What is Important as Well as the Sensitivity of Market Model Inputs......Page 19
1.4 Good and Poor Quality Data Sources and the Ability to Discriminate between Them......Page 20
1.5 A Regular, Ongoing Market Intelligence Gathering System, with a Trend Tracking Capability......Page 21
1.6 A Well-Documented Data Register That is Searchable, Secure, and Auditable......Page 22
1.7 Sound Corporate Governance and Reasonable Assurance......Page 24
References......Page 27
2.1 The Rise of Enterprise Risk Management and the Information Imperative......Page 29
2.1.1 Poor Information Integrity in the Energy Industry: Two Examples of Failing to Pull Back the Curtain......Page 33
2.2 Destroying Value: Part I of the Why behind Information Integrity......Page 36
2.2.1 Value Killer Analysis Conclusions......Page 41
2.3 Competitive Advantage: Part II of the Why behind Information Integrity......Page 47
2.3.1 The Institutional Investors......Page 52
2.3.2 The Credit Rating Agencies......Page 54
2.3.3 The International Banking and Finance Community......Page 56
2.3.4 The Financial Statement Auditors......Page 58
2.3.5 The Petroleum Reserves Estimators and Auditors......Page 59
2.3.6 Best Practices and Emerging Risk Standards: COSO, EFQM, and the CCRO......Page 61
2.4 Reliable External Information: A Conceptual Framework......Page 64
References......Page 68
3.1 External Information Integrity and Enterprise Risk......Page 71
3.2 Discovery......Page 75
3.4 The Quick Financial Analysis......Page 79
3.5.1 The Quick Look......Page 80
3.5.2 High-Level Financial Ratio Calculations......Page 82
3.5.3 Risk Factors - Standard Financial Statement Disclosures......Page 83
3.6 Enterprise Value Chain Mapping......Page 84
3.7.1 Enterprise Risk Management Application......Page 85
3.7.2 Process......Page 88
3.8 Stakeholder Analysis......Page 90
3.9.1 Enterprise Risk Management Application......Page 91
3.9.2 Process......Page 92
3.9.3 Other Considerations......Page 95
3.10 Selected Workshop Facilitation Techniques......Page 96
3.11.1 The Role of the Organizer......Page 97
3.11.2 The Role of the Neutral Catalyst......Page 99
3.11.3 The Role of the Motivator......Page 100
3.12 Delphi Method......Page 101
3.13.1 Enterprise Risk Management Application......Page 102
3.13.2 Process......Page 103
3.14 Cause and Effect Diagramming......Page 106
3.15 Discovery Tool 6: Cause and Effect Diagrams......Page 107
3.15.1 Using Oil Price Increase Example......Page 112
3.16 Surveying and Interviewing Techniques......Page 115
3.17 Discovery Tool 7: Selected Surveying and Interviewing Techniques......Page 116
3.17.1 Process......Page 118
3.18.1 San Felipe Resources Takes up the Enterprise Risk Challenge......Page 121
3.18.2 San Felipe Resources and Enterprise Risk - The Genesis......Page 122
3.18.3 Criticality - Barry Finds Out What's Important......Page 123
3.18.4 Competence......Page 132
3.18.5 Night Flight......Page 138
3.19 Discovery: Parting Shots......Page 140
References......Page 141
4. Assessment......Page 143
4.1.2 Governance Guideline: Criticality, Consistency, Accuracy, Transparency, and Competence......Page 146
4.2 Assessment Tool 1: Corporate Governance Guideline for Information Integrity - A Checklist for Directors, Officers, and External Analysts......Page 147
4.2.1 A Framework: The Information Testing and Validation Process......Page 150
4.3 Assessment Tool 2: Information Testing and Validation......Page 151
4.3.2 Initial Data Screening......Page 152
4.3.3 Basic Validation Techniques......Page 154
4.3.4 Advanced Validation of the Process and Data......Page 155
4.3.5 Modeling and Simulations......Page 156
4.4 Graphical Spot-Checking......Page 158
4.5 Assessment Tool 3: Graphical Spot-Checking......Page 159
4.5.1 Enterprise Risk Management Application......Page 164
4.7 Assessment Tool 4: Validation through Simulation......Page 167
4.7.1 Enterprise Risk Management Application......Page 168
4.7.2 The Simulation Process, its Inputs and Outputs......Page 169
4.7.3 Summary and other Considerations......Page 170
4.8 Quantitative Modeling......Page 171
4.9 Assessment Tool 5: Quantitative Modeling......Page 172
4.9.1 Models Designed for Communication (Not Just Computation)......Page 173
4.11 Assessment Tool 6: Stress Testing - A Framework for Assessing and Quantifying Financial and Operational Risks......Page 177
4.11.1 Definitions and Requirements......Page 180
4.11.2 Stress Test Development Steps......Page 185
4.11.3 Other Considerations......Page 186
4.12.1 Blessed Assurance......Page 188
4.12.2 The Road to Reliability: Timeliness and Consistency......Page 200
4.13 Assessment: Parting Shots......Page 201
References......Page 203
5. Disposition......Page 205
5.2 Scenario Planning......Page 208
5.3 Disposition Tool 1: Scenario Planning......Page 209
5.3.2 Other Considerations......Page 213
5.4 Political Risk Analysis......Page 214
5.5 Disposition Tool 2: Political Risk Analysis......Page 215
5.5.2 Detailed Description of the Political Risk Process......Page 216
5.6 Documentation Guidelines for Assumptions and Externally Gathered Information......Page 220
5.7 Disposition Tool 3: Documentation Guidelines......Page 221
5.7.1 Other Considerations......Page 223
5.7.2 Enterprise Risk Management Application......Page 224
5.9 Disposition Tool 4: Enterprise Risk Register......Page 225
5.9.1 Enterprise Risk Management Application......Page 230
5.10 Environmental Scanning......Page 231
5.11 Disposition Tool 5: Environmental Scanning......Page 232
5.12 Disposition Vignette......Page 239
5.12.1 Scenario Development and Executive Summary......Page 241
5.12.2 Blessed Assurance......Page 248
5.12.3 Coup de grâce: The Big Day......Page 255
5.13 Disposition: Parting Shots......Page 262
References......Page 264
6.1 The 21st Century Energy Merchant and the Alpha Advantage......Page 267
6.1.1 "Feeding and Care" of the Stakeholders......Page 271
6.2 3M's Deep Satisfaction of Customer Needs......Page 273
6.2.1 Sustained Competitive Advantage......Page 275
6.3 Conclusions......Page 278
References......Page 279
Acronyms and Abbreviations......Page 281
Index
......Page 283