Page 29 - Annual Report 2020

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Group Risk Group Risks
Categories
Strategy Strategy Commodities Assets
formation exposure and growth Strategic Report
options

Growth and Political Expansions,
development stability and organic growth
new country and major
entry projects
Production and Operational Mine to port Third party Asset Transformational
operations productivity infrastructure performance integrity change Governance at BHP

Commercial Procurement Maritime Commodity Sales Counterparty
and inbound price security and risk
supply chain concentration
management 
Planning and Exploration Resource Reserve Rehabilitation Tailings Geotechnical
technical development reporting and closure storage stability
facilities
 
People and Attract, retain Diversity, Industrial Labour
culture and engage inclusion and employee relations
capability and equal relations Remuneration Report
opportunity
Health and Aviation Process safety/ Non-process Physical Mental and Occupational Contractor Occupational
safety hazardous fire and security and physical safety management health
materials explosion company health exposures
containment ▲  crisis
Environment, Biodiversity Human Climate Community Water
climate change loss and land rights change interactions
and community use impacts
▲ ▲
Technology, IT/OT service Cybersecurity Automation Data Directors’ Report
innovation and management and technology protection Principal risks
systems innovation
The allocation of our principal risks to the Group Risk
Architecture is shown in a darker shade of blue. Our principal
Financial Liquidity Tax Financial Balance risks are described further in the Risk factors section. These
management control and sheet include risks that could result in events or circumstances that
reporting might threaten our business model, future performance,
solvency or liquidity and reputation.
In identifying our principal risks, we have considered the
Allocation Capital Corporate Licence potential impact and probability of the related events or
of capital and allocation planning to invest circumstances, and the timescale over which they may occur.
group planning
Changes to our principal risks in FY2020:
 New
Legal Geopolitics Ethics and Legal and ▲ Renamed Financial Statements
compliance and and compliance regulatory
stakeholder stakeholder Changes are described further in the Risk factors section.
management relations 

Risk appetite be taking too little or too much risk, and to identify whether further
BHP’s Risk Appetite Statement has been approved by the Board action is required. Our current KRIs monitor data such as market
and is a foundational element of our Risk Framework. It is made concentration based on the percentage of revenue linked to a
up of a qualitative statement for each Group Risk Category that single jurisdiction, the number of critical cybersecurity incidents,
describes the nature and extent of risk we are prepared to take greenhouse gas emissions relative to the FY2017 baseline and Additional information
in pursuing our objectives. When a new Group Risk Category is trends in the number of community complaints received.
introduced, the Board is asked to approve an updated Risk Appetite Strategic business decisions
Statement that includes a new qualitative statement for that new Strategic business decisions and the pursuit of our strategic
Category. The Risk Appetite Statement provides guidance to objectives can inform, create or affect risks to which BHP is
management on the amount and type of risk that is acceptable, exposed. These risks may represent opportunities as well as
and key risk indicators are set by management to help monitor threats. The Risk Appetite Statement and KRIs are available to assist
performance against our risk appetite. in determining whether a proposed course of action is within BHP’s
Key risk indicators risk appetite.
Key risk indicators (KRIs) assist in identifying whether BHP is Our focus when managing risks associated with strategic business
operating within or outside of our risk appetite, as defined in our decisions is to enable the pursuit of high-reward strategies. Shareholder information
Risk Appetite Statement. They also support decision-making by Therefore, as well as having controls to protect BHP from the
providing management with information about financial and downside risk, we will implement controls to increase the likelihood
non-financial risk exposure at a Group level. KRIs are defined for of the opportunity being realised. For example, we might establish
Group Risks to provide the data for proactive monitoring of BHP’s additional governance, oversight or reporting to ensure new
risk performance. Where upper or lower KRI limits are exceeded, initiatives remain on track.
management will review potential causes to understand if BHP may

BHP Annual Report 2020 27