Risk management Our risk management process ensures that we respond to and mitigate sustainability issues effectively
Lundin Energy’s risk management process is driven by the Board to encourage foresight, pro-activeness and informed decision making. Lundin Energy follows a “three lines of defence” approach where: • Local management has responsibility for sustainability risk and opportunity identification, implementing the systems to control risks and opportunities and monitoring their impact; • Senior management are responsible for ensuring effective processes and for reviewing the mitigation efforts; and • Internal and external audits test the effectiveness of the controls used to mitigate risk and realise opportunities. Lundin Energy’s risk and opportunity universe falls into three areas: strategic, operational and financial risks, which includes risks to the Company’s reputation or the impact that external risks could have on the business. Lundin Energy uses a risk matrix to classify and communicate the impact of each risk based on a range of indicators. The highest risk area in the matrix would be considered substantive. Sustainability risks, including climate change related risks, like risks in other categories, are measured quantitatively and qualitatively in order to prioritise them.
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Lundin Energy Sustainability Report 2021
Indicators such as international attention due to major litigation, potential for penal action, or a substantial negative effect on share price would be substantive, as would a long-term limitation to access new licences. Quantitative indicators used by the Company to measure and define impact include potential net impact in MUSD, and investment and/or financing required to mitigate risks. Each sustainability risk on the Company’s risk register is reviewed on a quarterly basis by the risk owners and reported after a peer review with local management. These are further reviewed and reported to the corporate level by the Corporate Risk and Insurance Director and to Executive Management and the Board Sustainability Committee on a bi-annual basis. The ultimate responsibility for managing sustainability issues rests with the CEO of the Company. Responsibility for development of risk management and mitigation plans for each sustainability risk is delegated to different risk owners across the Company, including the VP Sustainability, HSEQ Director and local management.
