Positive Risks in - In the menu: To change E&C Industry...

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THIS DOCUMENT IS ••CONFIDENTIAL-RESTRICTED

Frankfurt • June 2019Mayank Agarwal • Global Risk Mgt Director

ENGINEERING& CONSTRUCTION

DISTRIBUTION LIST : ECRI Sponsors

Positive Risks in E&C Industry: Identification & Treatment

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I AIR LIQUIDE, A WORLD LEADER IN GASES, TECHNOLOGIES AND SERVICES FOR INDUSTRY AND HEALTH

Wiesbaden • 2019 Q2Mayank Agarwal • E&C Global Risk Management Director

Managing Positive Risks


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Contents

1 About Air Liquide

2 Process for Positive Risks

3 How to identify Positive Risks

4 How to treat them

5 Conclusions / Benefits

6 Q&A






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1About Air Liquide

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March 2018 Group presentationTHIS DOCUMENT IS PUBLIC AIR LIQUIDE, THE WORLD LEADER IN GASES, TECHNOLOGIES AND SERVICES FOR INDUSTRY AND HEALTH

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A world leader ingases, technologies and services for…

● a wide range of industrial processes for our customers:

– energy, metals, food, chemicals, automotive, pharmaceuticals…

INDUSTRY HEALTH

● hospitals● patients at home ● hygiene and specialty

ingredients

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2017 key figures

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~65,000EMPLOYEES

PRESENT IN

80COUNTRIES

REVENUE

> €20bn

MORE THAN

3.5 MILLIONCUSTOMERS & PATIENTS

NET PROFIT

> €2bnCASH FLOW

> €4bn

2017 Figures

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Group revenue surpasses €20bn

GAS & SERVICES

96%Industrial Merchant

Large IndustriesHealthcareElectronics

ENGINEERING& CONSTRUCTION2%Air Separation UnitsHydrogen and CO production unitsTechnologies

2017Revenue

€20.3bn GLOBAL MARKETS& TECHNOLOGIES2%

Markets:Energy transition, Scientific exploration, Maritime logistics

2017 Figures

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April 2017Air Liquide Engineering & Construction •

THIS DOCUMENT IS PUBLIC Air Liquide, the world leader in gases, technologies and services for Industry and Health

Air Liquide Engineering & Construction presentation 7

A technology partner of choice

● Air Liquide Engineering & Construction builds the Group’s production units - mainly air gas separation and hydrogen production units - and supplies external customers with its portfolio of technologies.

● Its industrial gas, energy conversion and gas purification technologies enable customers to optimize the use of natural resources.

Patents

1,600Proprietary

technologies

60

Engineering centers and

front-end offices

15Manufacturing

centers

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Air Liquide Engineering & Construction presentation

Our expertise

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WITHIN AIR LIQUIDE GROUP

● Design and build Group’s industrial gas production units

– Solution oriented towards our gas customers

– Plant life-cycle optimization

– Supporting operations

● Sustainable and competitive technology & process solutions

– Industrial gases (O2, N2, H2, CO, CO2, rare gases)

– Energy conversion and clean fuels

– CO2 capture

– Gas conditioning and purification

– Leveraging Group’s operation experience

FOR OUR EXTERNAL

CUSTOMERS

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Full coverage of the entire project life cycle

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Process TechnologyConceptual & Front-End

Engineering Design Integrated Solutions

Licensing engineering services & proprietary equipment

High-end engineering & design capabilities

Project management and execution services

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Our technology portfolio

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Cryogenics technologies:

● Air separation units● Liquefied Natural Gas● Standard Plants● Gas treatment

Lurgi technologies:

● HyCO● Downstream &

Petrochemicals● Oleochemicals

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Our locations worldwide

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CalgaryMontrealHouston

VitryChampignyFrankfurtKrakowKievMoscow

New Delhi

BeijingHangzhouShanghaiKobeSeoul

Johannesburg

Ras Al KhaimahAbu DhabiDubai

SingaporeKuala Lumpur






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2Process for Positive Risks






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● Through dedicated programs e.g. – Profit Enhancement Plans– Value Engineering– Value Add analysis

=> Focussed on identifying & treating positive risks

● Through integrated Risk Management process– Threats & Opportunities Process – Identification by the same team– Use same risk review meetings

=> Focus required on identifying & treating positive risks

How does it work within E&C Industry






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● Risks ISO 31000: 2018 – Effect of Uncertainties on Objectives

=> Uncertainties that might impact Objectives (probability) (impact / severity)

● Positive Risks / Opportunities=> Uncertainties that might positively impact Objectives (probability) (impact / severity)

What are Positive Risks (Opportunities)






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Generic Iterative Process (adapted from ISO 31000)

Implement Actions

Identify Risks

Analyze Risks

Prioritize Risks based on Impact

Plan Risk Treatment

Monitor & review(How is the project risk profile evolving?)

Communicate & Consult(with all stakeholders of project objectives)

Define Objectives

(Severity) (Mitigation)






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3Identify +ve Risks






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Positive Risks

Could be overcome by Encouraging Positive Thinking also during Risk Reviews

● Harder to identify

● Fewer by definition






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● How could we prepare ourselves, in case we might get lucky?

● What should we do now, so luck might be on our side?

● What could we do better, if some constraints that might be relaxed?

● ….

What questions to ask?






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4Treat +ve Risks






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Avoid

Transfer (to others)

Reduce / Mitigate

Accept

Escalate / Pass On

Exploit (make sure)

Share (with others)

Enhance (maximize)

Accept

Escalate / Pass On

Increase Surety

Involve Others

Change Impact

Accept the Risk

Inform Others

-ve Risks +ve Risks

Use General Terms / Risk Treatment Strategies






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How to Exploit an Opportunity ?

● Take decisions to ensure it happens

● Eliminate uncertainty

● Increase probability of occurrence upto 100%

● Strengthen Causes to increase chance of happening

● Change project strategy or scope to include opportunity






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How to Enhance an Opportunity ?

● Increase the Impact of Risk

● Prepare for decisions to be taken once it happens

● Target the “Impact Drivers” to maximize the impact






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How to Share an Opportunity ?

● Which party is in the best position to exploit / enhance the Risk?

● If needed, a formal contract could be entered on profit/cost sharing, etc.

● Delegate the action, but retain ownership

● Follow regularly on actions towards desired outcomes






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5Why should we do it?






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Benefits of Managing +ve Risks

● E&C Industry typically works on low margins - Managing

Opportunities helps enhance profitability

● Increase chances of success / meeting project objectives

● Better define the contingency needs

● Not depending on “getting lucky”, but preparing for it

● Risk Mgnt adding value towards profit enhancement

● Encourages innovation

● Motivates team






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6What are you doing?






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Introspect our processes

● How many +ve Risks v/s Total Risks identified (1%, 5%, 20%?)

● Do you have an integrated threat & opportunity process?

● Are you using the right terms (e.g. treatment v/s mitigation)

● Are you reminding the concept of +ve risks during each risk

review?

● How do you follow the enhancement / exploit strategies?






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Thank You

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