3.7.1Company Appetite for Risks
The Risk Appetite Statement approved by the Management Board acts as the main guidance in setting the boundaries within which SBM Offshore is willing to take risks in pursuit of its strategic objectives. This is periodically reviewed, at least annually, in line with changing market conditions and the Company’s strategy, to ensure that the Company maintains the balance between risk and reward, while making decisions and pursuing potential opportunities available in the market.
SBM Offshore has reviewed the extent to which it is prepared to accept certain risks. It uses various metrics to define its Risk Appetite. These metrics were agreed with the Management Board at the start of 2017 including the respective boundary thresholds. The metrics cover a range of risk areas including Financial, Strategic, Operational and Technological. The various metrics are reviewed and reported quarterly to determine whether the Company is in or out of appetite for each metric.
SBM Offshore has an overall cautious and practical risk appetite, which is explained as follows in the key risk areas:
- Strategic risks: The Company is willing to accept certain risks as it endeavours to achieve its objectives.
- Financial risks: SBM Offshore manages its financial risks in order to provide shareholder return based on cash flow performance whilst at the same time ensuring that it maintains sufficient liquidity to fund new investments to secure the growth of the Company.
- Operational risks: With an integrated approach to quality and safety within SBM Offshore’s operations, the Company achieves high performance with no appetite to harm people or to damage its assets or the environment in the execution of any of its activities.
- Compliance risks: In its pursuit of continued outstanding governance and compliance, the Company has strong policies and controls in place to support the policy of compliance with SBM Offshore’s Code of Conduct, Anti-Bribery and Corruption Policy and any applicable laws and regulations.