Abstract

BP is one of the largest companies in the world with business interests beyond the hydrocarbon value chain. It has investments and operations in around 80 countries and an asset base of US$305 billion. Such a wide presence calls for effective management of risks. The case study discusses how BP came up with a comprehensive risk management framework to manage various risks. It gives a detailed picture of how the company proactively manages and reports the different kinds of financial risks it faces.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• Understand BP’s business and risk management framework
• Identify the various financial risks faced by BP
• Analyze the various issues and challenges in financial risk management
• Emphasize the importance of financial risk management

Keywords

Risk management, Financial risk, Financial risk management, FRM, BP, Market risks, Currency risk, Interest rate risk, Liquidity risk, Commodity Price risk, Equity price risk, Value at Risk, VaR, Credit risk, Currency Swap, Currency forward, Interest rate swap, Derivative instruments, Hedging, APOC, Business Model of BP, Upstream, Downstream, Rosneft, Risk Management at BP, Foreign currency exchange risk, Cylinders, Weighted average maturity.