- 15 Marks
Question
Ego Oil and Gas Limited is a company licensed to operate in Nigeria’s downstream oil and gas sector. The company owns tank farms and filling stations across the six geo-political zones of the country. These include the North-East and South-South, where there have been increased cases of terrorist activities, especially kidnapping.
The company recently suffered losses due to a fire outbreak at one of its tank farms and fraud at the Port Harcourt office in the South-South Zone. There is also a rumoured agitation by the labour movement in the country, which will further reduce the price of petroleum products. If this happens, the company will suffer severe revenue loss. In order to control and effectively manage risk, the company has decided to assess all its risks.
Required:
Design a risk map for the management of Ego Oil and Gas Limited and advise on the control measures for each risk category. (15 Marks)
Answer
To address the various risks, the company should adopt the following risk map and control measures:
- Operational Risk (Fire Outbreaks at Tank Farms):
- Control Measure: Install robust fire prevention and control systems, conduct regular safety audits, and train staff in fire safety procedures.
- Fraud Risk (Port Harcourt Office Fraud):
- Control Measure: Strengthen internal controls, implement stricter monitoring mechanisms, and conduct regular audits to detect and prevent fraud.
- Terrorism and Kidnapping Risk (North-East and South-South Zones):
- Control Measure: Employ enhanced security protocols, partner with law enforcement, and ensure employee awareness of security threats.
- Market Risk (Labour Movements and Price Reduction of Petroleum Products):
- Control Measure: Diversify revenue streams, hedge against market volatility, and engage with labour unions to minimize disruption.
- Tags: Control measures, Oil and Gas Sector, Risk Assessment, Risk Mapping
- Level: Level 2
- Topic: Risk Management and Corporate Strategy
- Series: MAY 2018
- Uploader: Kofi