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LEADING OIL & GAS OPERATOR CASE STUDY
Mitigating risk, guiding growth, and creating value with a ground-up ERM implementation
Introduction
Facing some inevitable hurdles from extended hypergrowth, a leading oil & gas company wanted to protect itself from evolving risks with a customized, comprehensive risk management framework. That's when leadership contacted Embark.
Our Solutions
Embark used its Project & Change Management and Office of the CFO expertise to design, implement, and document a powerful, sustainable ERM program for the company.
Index
The “Big Wins”
1. Embark designed and implemented a comprehensive ERM framework to help identify and manage sources of risk
2. With its new ERM program from Embark, the client’s far better prepared to mitigate and address internal and external threats from extended periods of hypergrowth
Our clients are happy. We’re happy. Everybody’s happy.
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We have had great experience with highly competent people in all projects we have engaged them for. In my experience the competence of the folks has been hard to replicate consistently with other companies.
Melanie Merritt, Corporate Controller of Helmerich & Payne, Inc.
The team is on top of it. They have been understanding and flexible with pricing and timing the engagement. The team, at all levels, is very competent in regards to the project. They stay in constant communication and engage us in a very personal yet professional manner.
Terry Nwosuocha, CPA - Senior Director of Financial Reporting & Accounting of SecurityScorecard
Amazing supportive attitude supported by a deep and broad knowledge and skill. Our requirement is always 1000% fulfilled by Embark team.
Bruce Suzuki, Lyseon North America Inc. (LNAI)
Embark sends the best people, so much so that it makes us think that these people grow on trees. We know they don't and we are grateful for all Embark does for our team.
Brandon Walls, CPA - Vice President, Controller of Ashford Hospitality Trust
Executive summary
Our publicly listed client was experiencing extended periods of hypergrowth. The client’s board felt a comprehensive risk management strategy was necessary to protect the company and its shareholders from expanding and evolving sources of risk. Leadership chose Embark’s team for the ERM evaluation and implementation due to our thoroughness, expertise, and ability to flex to the client’s specific needs. After a successful implementation and follow-up process, Embark is now assisting with the ERM program hand-off to the company's internal team.
About the client
Our client is one of the largest operators of conventional gas and oil properties in the Lower 48, recently expanding its footprint to include key southern operations as well. The company has experienced rapid growth in recent years through both complementary acquisitions and production. It also prides itself on maintaining low-cost operations and, thus, maximizing profitability and cash flow.
Challenges & objectives
Periods of hypergrowth had left the client susceptible to new forms of risk, both internal and external, particularly as the company’s operations and headcount rapidly expanded. Thus, everything from financial processes and management to operational and strategic issues drove the need for a far-reaching ERM framework, one that addressed the client’s unique needs and provided a holistic view of their risk environment.The company asked Embark to spearhead an ERM initiative that would effectively identify, address, and manage a number of risk-related needs, including:
- Developing an ERM framework that would address a set of risks that are often unique or nuanced within the energy industry, including ESG and acquisition risk
- Identifying and prioritizing top risks faced by the organization
- Planning a response/mitigation strategy
- Advising on digital tools to maximize transparency and insight
How Embark helped
Embark worked closely with the client to successfully build out and implement an ERM program that addressed their unique risks, objectives, and needs by:
- Interviewing leadership individually with a set of tailored questions about their concerns regarding risk, how they generally view various risks within the organization, how and if the company effectively mitigate those risks, and how they see risk evolving or changing in the future
- Interviewing audit committee members for an independent perspective on the risk environment
- Leveraging our industry-specific knowledge and genuinely listening to the client to develop an ERM program that was tailored to its objectives
- Developing the risk universe through identification of the company’s top inherent risks
- Identifying and mapping risks to existing mitigating factors and activities
- Facilitating the company’s process of defining its risk appetite and target risk levels
- Identifying and prioritizing top sources of residual risk
- Planning a response strategy to close the gap between residual and target risk levels
- Identifying ways to reduce acquisition risk
- Presenting the overall ERM program as well as findings and recommendations to the Board of Directors
- Working with the Board to ensure their concerns were adequately incorporated into the ERM program implementation
- Visually depicting the ERM process, risks, and recommendations to maximize visibility and understanding across the client’s team
- Formalizing various policies and documentation across the enterprise
- Laying the groundwork for a sustainable ERM program, including ongoing updates and monitoring
Results: our client is well-prepared for the future
In the end, Embark was able to design and implement an ERM framework that suits our client’s unique and ever-evolving risk environment and objectives. The enterprise is now much more resilient to internal and external threats, and well-poised to continue its growth strategy for years to come. Embark is currently assisting in the ERM hand-off to the company’s internal team and preparing for a possible second phase focusing on integrating automated reporting, analytics, and data dashboards to further improve the ERM program’s transparency and insights.
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