by Mr. Venkataram Arabolu, Managing Director, BSI Management Systems India In Association with PetroFed Business Continuity Management for Oil, Gas & Petrochemical Industries September 16, 2008, New Delhi

2 About BSI Group Founded in 1901, Royal Charter Company Clients in over 120 countries, BSI India Commenced operations in year 2000 and has over 3500 customers.  Independent assessment (third party & second party), certifications and training of management systems  Product testing Labs & services  The development of Management systems Standards such as BS 5750 (later became ISO 9001)  Integrated Management System software

3 What is Business Continuity Management ? Definition Holistic management process that identifies potential threats to an organization and the impacts to business operations that those threats, if realized, might cause, and which provides a framework for building organizational resilience with the capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand and value-creating activitiesHolistic management potential threats

4 A turning point-but not the least

5 Disruptions that we are familiar with

6 Heart of U.S. Oil and Gas Industries Shut Down as Storm Approached About 23 percent of the nation's oil refining capacity lies along the Texas coast

7 Hurricane IKE, Path, September 14 th 2008

8 Shallow water facilities that currently act as a hub Deepwater facilities that currently act as a hub Future deepwater facilities Pipelines Spread of Oil & Gas facilities covering Texas, Louisiana, Mississippi & Alabama Oil & natural gas production has been shut (US major Oil refineries with capacity of 5 MMBBL which is about 30% of US capacity in the effected area) Staff has been evacuated from 452 production platforms (63.0%) and 81 rigs (66.9%) 4.5 Million people with power outage,no water, no power and no gasoline.

9 Disruptions in India Private Petroleum companies Shut retail outlets Oil spills threaten Gujarat marine park, Refinery fire & Explosion leading to shutdowns, affecting supplies & profitability etc Spurt in LPG imports due to unit interruption BHN 5BHN 5 after the fire

10 Global Threats in Oil and Gas Industry

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13 Terrorism Corporate Culture Learned helplessness Acquisition Unreliable supply obsolescence Resource nationalism Global warming Outsourcing Emerging threats…. unexpected event Regulation deregulation Pandemics IT Security

14 Marsh Report 2008 Type of Risk  Terrorism & Criminal Activities  Availability of Oil and Gas Resources  Energy price volatility  Infrastructure & Development obsolescence  Political/regulatory risk issues  Risk of Natural Disasters  Recruitment & retention of qualified work force  Outbreak of Pandemic  Environmental impact of operations  Systemic financial risk  Supply chain risk  Increased internationalization ( partnership/JV risk)  Global macro-economic risks

15 Revisit - Business Continuity Management Definition Holistic management process that identifies potential threats to an organization and the impacts to business operations that those threats, if realized, might cause, and which provides a framework for building organizational resilience with the capability for an effective response that safeguards the interests of its key stakeholders, reputation, brand and value-creating activitiesHolistic management potential threats

16 Reality Nearly 1 in 5 businesses suffer disruption every year Source BCI

17 What do you think is currently the weakest link in your Business continuity strategy, planning and recovery efforts?

18 BS BS :2006  Code of practice for business continuity management  Published 28 November 2006 BS :2007  Specifications  Published 20 Nov

19 What a BCMS achieves

20 Business Continuity Lifecycle Understanding the Organization Determining BCM strategy Developing and implementing BCM response Exercising, maintaining and reviewing BCM program Management

21 Plan–Do–Check–Act (PDCA) Cycle Interested Parties Business Continuity requirements and expectations Managed Business Continuity Establish Maintain and improve Implement and operate Plan Check Act Do Monitor and review Continual improvement of the Business Continuity Management System

22 Why BCMS ? Minimize business disruptions Quickly recover to normal business operations Protect an organization’s value and reputation To meet  shareholder commitments  national / legislative requirements  legal, regulatory and contractual commitments  moral and social responsibilities Demonstrate “best practice”. Reduce insurance liabilities.

23 Board CEO CFOCRO Business Unit Treasurer's office Seeks strategic dialogue about risk but must rely on intuition Has narrow & siloed view of risk, often focusing on compliance Lacks the knowledge & risk vocabulary to engage in dialogue with management Understands the risks but has little influence on decision making Uses sophisticated risk management tools, but only for short term risk Lacks the sophistication to understand, much less measure, their own risks Sample Organizational Risk Culture Source HBR Sept 08

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25 Logical steps

26 Risk matrix Critical Less critical

27 Risk Impact versus control Priority focus should be on the aspects with high risk and those with the largest gap between risk and control IMPACT FACTOR VS STRENGTH OF CONTROL FOR ACTIVITIES Vulnerability impact factorStrength of Controls

28 BCM – the way forward 1. Top level commitment 3. Identify the Threats and Risks 2. Initiate the Management Process 8. Test, Exercise and Maintain the Plan 7. Developing and Implementing the Plan 6. Develop Strategies 5. Business Impact Analysis (BIA) 4. Manage the Risks as part of Risk Management

29 Where BCM is going? No longer just a fashion accessory, BCM is now an integral part of managing the business Integrated across all business functions; no longer seen as an IT speciality Now being accepted as a strategic business imperative Progress towards independent auditable processes  BS Broader based agreement on what is best practice in the form of the a new standard, BS

30 Thanks End of Presentation