Stay Ahead of the Risk

Narelle Pyne Origin Energy

Landscape is becoming increasingly complex….

Turnbull Report COSO & COBIT

Barings Collapse

LTCM Collapse

Sarbanes Oxley

Terrorist activity Enron

Pressure Groups Green Issues

Basel Carbon Tax

Eurozone weakness

What do you need to stay ahead?

A structured approach to managing uncertainty.

Enterprise risk profile of RBS Group (2007)

Snapshot of RBS Group (2007) • 50 brands • 71 businesses • 25 countries • 198 countries that we fund other businesses operations • At least one thousand products • 140,400 members of staff • 22 payments systems • 102 new pieces of legislation or regulation • 254,000 reported frauds in 2004 • 6 acquisitions in 2004 • 49 staff changes within the enterprise risk community

alone

Bank Top Risks – 2007

1 Damage to reputation 33% 2 Market Risk (financial) 88% 2 Employee Dishonesty 88% 4 Loss of data 100% 4 Market environment 43% 6 Third Party Liability 50% 6 Regulatory / legislative changes 83% 8 Interest rate Fluctuation 100% 8 Counter party credit risk 80% 10 Directors & Officers personal liability 75% 10 Computer viruses / malicious codes 100% 10 Technology failure 75%

Source: AON Global Risk Survey 2007

3. Reputation

Perception is reality

All encompassing

What is Reputation?

Yes!

Can you damage reputation?

All encompassing

Perception

At the most basic level by failing to meet expectations

Company

Implicit and explicit

contracts of trust

Employees Interest Groups

Regulators

Investors Public/ Media Customers

Suppliers Government

Stakeholders

Conflicting interests and expectations

How do you damage your reputation?

The Reputation ‘Touch Points’

1. By the way we conduct ourselves as a business;

2. By the we way we transact with our customers – through the selling of financial products and services; and

3. By our association with our customers.

Banks sell loans to vulnerable Some High Street banks are mis-selling loans to the sick and vulnerable, evidence obtained by the BBC has shown.

Staying ahead – what we did....

• Perception

Perception

•The Reputation Risk Policy was issued in January 2006. The Policy of the Group, as a prudent and responsible financial services provider, is to establish and maintain systems and procedures, providing management with reasonable assurance that the Group will not enter into a relationship or transaction where:

- the transaction or business activity being conducted by the prospective customer is not legal. - is not commercially viable. - the transaction or customer relationship would put the reputation of the Group, or any part thereof, at risk.

•Linked to key business processes across the Group.

Different industry, location and risk profile

Snapshot of Origin • Origin is the leading Australian integrated energy company • ASX Top 20 by market capitalisation • Operations span across the energy supply chain; from gas exploration and

production to power generation and energy retailing • 5,800+ employees • 150,000+ shareholders • 52.8% interest in Contact Energy • 4.3 million gas, electricity and LPG customers across Australia • Market leading green energy retailer • 5,900 MW owned or contracted generation capacity

Energy Top Risks

Staying ahead – what we did.... • Evaluated inherently high risk factors across the company that

could lead to or result in fatality or permanent disabling injury.

• Reviewed approximately 38,000 incidents and observations over a 2 year time period.

• Utilised industry guidance publications and industry examples to frame the development approach.

• Endorsed by Origin’s Executive Management Team.

• Company wide launch of the Life Saving Rules.

Origin’s Life Saving Rules

Governance is all about a company ensuring that its business is properly controlled. The same key elements of corporate governance apply to all companies, large and small, irrespective of industry:

•a suitably constituted Board or governing body; •clear roles and responsibilities for the business leaders, with appropriately delegated powers; •a robust high level control framework; and •appropriate and timely management information.

The common ground

Where to from here?

Source: Global Risk Management Survey 2013, AON Risk Solutions