HomeCase StudiesKJO Raises the Bar to Implement ERM to International Best Practice
KJO (Al-Khafji Joint Operations) is owned jointly by Aramco Gulf Operations Company Limited (AGOC) and Kuwait Oil Gulf Company (KGOC). The shareholders and KJO combined are the world’s largest producer of crude oil.
A Tender for an ERM Review and Enhancement was decided on, following 2 unsuccessful attempts from 2010 by the internal ERM Team. They had used the KJO Risk Management Policy, Framework & Procedure Manual. After 6 years of not achieving the level of ERM Implementation expected, the JOC (Joint Operating Committee that directs and manages production and administration functions) decided that it was important and timely for KJO to engage a third-party ERM expert to provide an unbiased overall review and enhancement of KJO’s current ERM practices.
CorProfit was 1 of 7 that were pre-qualified from several countries and after the Tender closed, it took KJO about 10 months to complete the Tender process. KJO was determined to ensure that the evaluation process was not solely based on the lowest prices.
CorProfit was awarded the consulting services Contract to span 3-years, with the first 6 months to cover the review and enhancement of KJO ERM documentation and practices.
The kick-off meeting that CorProfit facilitated demonstrated to KJO that CorProfit had understood their requirements and expectations.
This was followed by a Workshop to confirm the Vision that KJO has for ERM, with clear improvements defined each year for 4 years in a Maturity Roadmap. CorProfit had anticipated certain aspects of ERM, that weren’t defined in the Tender documents would also be of value and KJO confirmed that these should be included.
After a few days of working with the ERM Team, the Superintendent of Risk called CorProfit into his office and informed that of the 7 Tenderers, only CorProfit’s offer gave KJO confidence. As there were lower priced offers, KJO was obliged to interview those Tenderers and it became evident that they lacked the complete knowledge.
CorProfit found that the KJO ERM was motivated to gain as much knowledge as CorProfit could share. The cooperation between CorProfit and the KJO ERM Team was a key factor that brought all items in the Scope to be fulfilled to everyone’s satisfaction.
CorProfit’s Scope of Work completed:
To review all relevant policies, framework, procedures, processes, tools, software, structures, etc. that relates to the directing, administering or controlling of the ERM activities in KJO, i.e., in accordance to the international best practice.
To assess and review the current KJO Risk Management Policy & Procedure Manual to ensure that it is comprehensive, rigorous and relevant to the Company’s operations. This shall be done in accordance to the ISO 31000 Risk Management – Principles and guidelines.
To benchmark the Company’s ERM practice with the best practice of reputable Oil & Gas companies.
To develop the Risk Appetite Statement and Methodology that reflected KJO’s Corporate Objectives.
Propose suitable Risk Management Reports format for all Company levels that show the status of managing risks and action plans. Reporting is to give assurance to the top management that strategic and key risks are managed within Risk Appetite.
Provide training and coaching of the Company’s ERM Team
Conduct two (2) introduction/implementation workshops for executive management and department managers.
Conduct five (5) introduction/implementation workshops for Superintendents and Risk Coordinators.
Establish a Road Map spanning up to 5-years for the Company’s ERM maturity levels progress.
To develop and document all the required specific improvement action plans, supported by milestones, for the Company to achieve the targeted maturity levels.
CorProfit’s ongoing role is to support the ERM Implementation:
Conduct an annual follow-up review and assessment for the ensuing two (2) years (year II and year III) to ensure that the ERM implementation in the Company is continuously in the right track of progress.