Page 28 - Annual Report 2020

1.5.4 Risk management

The identification and management of risks is central to achieving our strategic objectives. It protects us against potential negative
impacts, enables us to take risk for strategic reward and improves our resilience against emerging risks. BHP believes effective risk
management requires a single, consolidated view of risks across the business to understand the Group’s full risk exposure and to prioritise
risk management and governance activity. As such, we apply a single framework (known as the Risk Framework) for all risks.
There are four pillars in our Risk Framework: risk strategy, risk governance, risk process and risk intelligence.

Risk strategy Risk governance
Taking the right risks, The right people
at the right time, focusing on the
in the right way right things

Risk intelligence Risk process
Gaining insights Using the right
from our risk tools for the job
knowledge

Risk strategy
Group Risk Architecture
The Group Risk Architecture is a tool to identify, analyse, monitor and report risk, which provides a platform to understand and manage
the risks to which BHP is exposed. It currently comprises 12 Group Risk Categories, which cover a number of Group Risks. Risks in BHP’s
risk profile are connected to a Group Risk. This gives the Board and management visibility over the aggregate exposure to risks on an
enterprise-wide basis and supports performance monitoring and reporting against BHP’s risk appetite.
For example, under the Group Risk of occupational safety, we have identified risks relating to the safety of our people in performing their
work (such as vehicle incidents, falls from height and dropped objects) and, under the Group Risk of mental and physical health, we have
identified risks to our people associated with the impacts of the COVID-19 pandemic on our assets and offices.
The Group Risk Architecture (as at 30 June 2020) is outlined in the following diagram. The left column shows the Group Risk Category
and the columns to the right show the allocation of the Group Risks to each Category. This Group Risk Architecture changes over time
to reflect our strategy, changing activities, organisational accountabilities and consideration of the external context. For example, Group
Risks may be added, removed, renamed, merged or moved between Group Risk Categories if there is a more appropriate place for them
in our continuously evolving Group Risk Architecture.
In FY2020, we added two new Group Risk Categories – Planning and technical, and Allocation of capital and group planning – which
include new Group Risks, as well as Group Risks moved from other categories. The new Group Risks were created to provide additional
visibility and oversight of some of the Group’s most significant risks and better recognise the importance of managing certain strategic
risks, including those relating to business planning, cash prioritisation and cash flow forecasts. In addition, changes were made to existing
Group Risks to further clarify and streamline the Group Risk Architecture. To date, the COVID-19 pandemic has not required any changes
to be made to the Group Risk Architecture, which is sufficiently broad to accommodate risks associated with the pandemic.

26 BHP Annual Report 2020