DRAFT: For Discussion Purposes Only

Executive Summary
Risk Inventory (2 of 2)
The enterprise risk inventory was developed through the process of reviewing company plans and
interviewing key personnel.

# Risk # Risk

A Compliance with Environmental Regulations M&A Target Identification, Valuation and

B [RAW MATERIAL] Prices
C Execution of Strategic Imperatives
D Disruptions in Transportation and Logistics
E Disruptions in Mining Operations
Renewal or Extension of [RAW MATERIAL]
F T.1
Leases
G Geological
P
Integration
Q Ethics or Regulatory Violation
R Contracting or Contract Management
S Information Technology Platform
T Health and Safety Experience
Safety – Roof Fall
T.2 Safety – Underground Explosion or Fire

H Interest Rates T.3 Safety – Movement of Mining Machinery

I Capital Funding U Financial Compliance

J Employee Talent Management V Rail Rates

K Industry Events W Organizational Change Management

L Supply Chain Failure X Third Party Relationships

M Changes in Regulatory Environment Y Competitive Environment

N Quality Issue Z Fraud

O Business Model, Portfolio and Cost Structure AA Labor Relations

Note: Definitions and other risk characteristics are provided in the Detailed Results section.

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Executive Summary
Prioritization Criteria
A survey tool was used to rank risks based on impact, likelihood and management capability. The
risk voting considered:

Impact Likelihood Risk Exposure

- Potential risk consequences
measured in terms of the following
factors: financial, operational and
reputational
- Assumes normal ongoing business
practices
- 1 to 5 rating scale
- Based on the likelihood of the risk
occurring over the next 12 months
- Assumes normal ongoing business
practices
- 1 to 5 rating
- An organization’s exposure to a risk
considering risk impact and likelihood
- Risk exposure = (Impact + Likelihood)/2

Management Capability Gap

- How well a risk is managed given current management capabilities: people, - The difference or ‘gap’ between the risk
processes, technology, policies/ procedures, analytics/ metrics, reporting/ exposure and current management
communication, and organization effectiveness
- 1-5 rating - This helps management evaluate the
alignment between the risk, current risk
management practices, and potential
mitigation activities

Note: Detailed risk prioritization criteria can be found in Appendix 3.

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Executive Summary
Risk Assessment Results – Prioritization
# Risk Impact Risk Exposure Mgmt Capability Gap
F Renewal or Extension of [RAW MATERIAL] Leases 3 1 3
T.2 Safety – Underground Explosion or Fire 1 2 7
M Changes in Regulatory Environment 9 3 1
B [RAW MATERIAL] Prices 10 4 8
T.1 Safety – Roof Fall 2 5 9
G Geological 8 6 6
T.3 Safety – Maintenance of Mining Equipment 4 7 2
P M&A Target Identification, Valuation and Integration 5 8 14
I Capital Funding 11 9 10
O Business Model, Portfolio and Cost Structure 7 10 13
E Disruptions in Mining Operations 6 11 18
V Rail Rates 17 12 11
K Industry Events 19 13 5
C Execution of Strategic Imperatives 14 14 19
J Employee Talent Management 25 15 4
N Quality Issue 18 16 20
D Disruptions in Transportation and Logistics 12 17 15
H Interest Rates 20 18 12
A Compliance with Environmental 24 19 21
Y Competitive Environment 17 20 22
T Health and Safety Experience 15 21 27
S Information Technology Platform 27 22 28
W Organizational Change Management 29 23 29
AA Labor Relations 13 24 30
R Contracting and Contract Management 23 25 24
L Supply Chain Failure 26 26 23
X Third Party Relationships 28 27 25
Z Fraud 30 28 26
U Financial Compliance 22 29 25
Q Ethics or Regulatory Violation 21 30 24

Universidad Austral Shaded areas indicate top 10 risks prioritized by 3

impact, risk exposure and the gap in management
 DRAFT: For Discussion Purposes Only

Executive Summary
Risk Assessment Results – Risk Exposure # Risk
A Compliance with Environmental Regulations
B [RAW MATERIAL] Prices
C Execution of Strategic Imperatives
T. D Disruptions in Transportation and Logistics
5.0
2
T. E Disruptions in Mining Operations
1 F Renewal or Extension of [RAW MATERIAL] Leases
4.5 G Geological
F H Interest Rates

T. I Capital Funding
4.0
3 P J Employee Talent Management
O K Industry Events
E
3.5 M L Supply Chain Failure
I M Changes in Regulatory Environment
B
G
D
Impact

N Quality Issue
A
3.0 C O Business Model, Portfolio and Cost Structure
A T Y
V P M&A Target Identification, Valuation and Integration
N
Q Ethics or Regulatory Violation
2.5 K
Q H R Contracting or Contract Management
U R J S Information Technology Platform
A
2.0 L X S T Health and Safety Experience
Z W
T-1 Safety – Roof Fall
T-2 Safety – Underground Explosion or Fire
1.5 T-3 Safety – Maintenance of Mining Machinery
U Financial Compliance
V Rail Rates
1.0
W Organizational Change Management
1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5
5.0 X Third Party Relationships
Likelihood Y Competitive Environment
Z Fraud
Top 10 by Risk Exposure Add by Impact Add by Capability Gap
AA Labor Relations

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Detailed Results
Overview (1 of 2)
Detailed risk assessment results are provided for each risk on the following pages. See the example
below:

Risk exposure results are provided in a

graphical heat-map format and other
details such as management capabilities
are provided in table format.

Detailed analysis of risk examples,

owners, potential drivers and
consequences support further risk plan
development and analysis (such as
risk scenarios and risk quantification).

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Detailed Results
Overview (2 of 2)
Risk Management
# Risk Impact Likelihood Gap
Exposure Capability
F Renewal or Extension of [RAW MATERIAL] Leases 4.35 2.88 3.62 3.76 (0.15)
T.2 Safety – Underground Explosion or Fire 5.00 2.00 3.50 4.00 -0.50
M Changes in Regulatory Environment 3.47 3.53 3.50 3.18 0.32
B [RAW MATERIAL] Prices 3.41 3.29 3.35 3.71 (0.35)
T.1 Safety – Roof Fall 4.70 1.90 3.30 4.40 -0.70
G Geological 3.47 3.12 3.29 3.65 (0.35)
T.3 Safety – Maintenance of Mining Equipment 4.00 2.40 3.20 3.00 0.20
P M&A Target Identification, Valuation & Integration 3.94 2.41 3.18 3.88 (0.71)
I Capital Funding 3.24 2.94 3.09 3.59 (0.50)
O Business Model, Portfolio and Cost Structure 3.65 2.53 3.09 3.76 (0.68)
E Disruptions in Mining Operations 3.65 2.35 3.00 4.00 (1.00)
K Industry Events 2.53 3.41 2.97 3.29 (0.32)
V Rail Rates 2.76 3.18 2.97 3.47 (0.50)
C Execution of Strategic Imperatives 2.94 2.76 2.85 3.94 (1.09)
J Employee Talent Management 2.29 3.41 2.85 3.06 (0.21)
N Quality Issue 2.65 2.94 2.79 3.88 (1.09)
D Disruptions in Transportation and Logistics 3.18 2.24 2.71 3.41 (0.71)
H Interest Rates 2.41 2.94 2.68 3.35 (0.68)
A Compliance with Environmental 2.29 3.06 2.68 4.24 (1.56)
Y Competitive Environment 2.94 2.35 2.65 3.65 (1.00)
T Health and Safety Experience 2.94 2.18 2.56 4.47 (1.91)
S Information Technology Platform 2.00 2.94 2.47 3.35 (0.88)
W Organizational Change Management 1.88 2.76 2.32 3.47 (1.15)
R Contracting and Contract Management 2.35 2.24 2.29 3.71 (1.41)
AA Labor Relations 3.00 1.59 2.29 4.18 (1.88)
L Supply Chain Failure 2.06 2.47 2.26 3.65 (1.38)
X Third Party Relationships 2.00 2.53 2.26 3.71 (1.44)
Z Fraud 1.88 2.41 2.15 3.76 (1.62)
U Financial Compliance 2.41 1.82 2.12 4.00 (1.88)
Q Ethics or Regulatory Violation 2.41 1.71 2.06 3.82 (1.76)

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Detailed Results
A – Compliance with Environmental Regulations

Risk Exposure Map

Risk and Compliance with Environmental Regulations – An
Description environmental compliance issue occurs as the result of the
5-High
actions of [CLIENT] employees or contractors

Potential • Enforcement of EPA or other regulations

Examples • Respirable dust standard

Potential Risk • Lack of compliance programs for new or existing

Drivers environmental regulations
• Weak planning or environmental monitoring
• Human error in materials handling
• Equipment failure

Impact
Potential Risk • Non-compliance with regulations, such as the Clean Air and
Consequences Clean Water Act
• Fines and penalties
• Reputation damage
• Clean-up costs A
• Additional monitoring and compliance activities
• Regulatory compliance penalties
• Delays in renewals of land leases 1-Low
• Short-term and long-term liabilities from human exposure

Risk Owner • TBD 1-Low Likelihood 5-High

Risk Mgmt.
Risk Plan Status • TBD Results Impact Likelihood Exposure Capability Gap
2014 2.29 3.06 2.68 4.24 -1.56
Adjust - - - - -
Final

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Detailed Results
D – Disruptions in Transportation & Logistics

Risk Exposure Map

Risk and Disruptions in Transportation Logistics – Operational
Description interruptions from scheduling, loading and transportation
5-High
issues impact domestic or international sales

Potential • [CLIENT] is severely impacted by a single point of failure for

Examples [RAW MATERIAL] in transit to customers or 3rd party
affiliates
• Shoaling at [CITY] port
• Earthquake impacts areas surrounding ports

Potential Risk • Dependency on single load-outs or points of exit

Drivers • Dependency on rail and/or trucking D

Impact
• Dependency on [CITY] ports to support international sales
• Weather

Potential Risk • Inability to deliver [RAW MATERIAL] to customers in a

Consequences timely fashion
• Loss of sales

Risk Owner • TBD

1-Low
Risk Plan Status • TBD
1-Low Likelihood 5-High

Risk Mgmt.
Results Impact Likelihood Exposure Capability Gap
2014 3.18 2.24 2.71 3.41 -0.71
Adjust - - - - -
Final

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Detailed Results
J – Employee Talent Management

Risk Exposure Map

Risk and Employee Talent Management – Management struggles to
Description attract and retain employee talent, build broader capabilities
5-High
and build bench strength

Potential • The company loses management talent to competitors

Examples and/or adjacent industries
• Expertise of retiring executives is not efficiently replaced
• Qualified internal candidates are not available to fill key
positions in rural locations
• Appropriate candidates with diverse backgrounds and
capabilities are not available to fill key positions or provide
adequate oversight for non-defense industry activities

Impact
Potential Risk • Company reputation effects from various events
Drivers • Salary and benefit structure
• Overall company outlook and growth prospects J
• Lack of employees in market with required skills
• Aggressive competitor hiring of existing or prospective
employee
• Lack of financial means to maintain internal bench strength
1-Low
Potential Risk • Decreased performance on existing work and reduced ability
Consequences to capture new work
1-Low Likelihood 5-High
• Challenge in managing newly acquired entities
• Reduced predictability and loss in investor confidence
• Missed opportunities to develop a work force with a diversity Risk Mgmt.
of skills and experience Results Impact Likelihood Exposure Capability Gap
2014 2.29 3.41 2.85 3.06 -0.21
Risk Owner • TBD
Adjust - - - - -
Risk Plan Status • TBD Final

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Detailed Results
L – Supply Chain Failure

Risk Exposure Map

Risk and Supply Chain Failure – Failure in the supplier base produces
Description unexpected costs, quality issues or schedule disruptions
5-High
Potential • A major quality problem at a critical supplier substantially
Examples impacts [CLIENT]’s cost and schedule performance on
multiple contracts
• A supplier’s design, engineering and testing capabilities are
not sufficient to meet applicable technical requirements.
• Reductions in demand have created a sole source supplier
environment for a given part. A force majeure event (e.g.
tornado) destroys the only manufacturing site of that single
source supplier.

Impact
• [PORT NAME] has inadequate spares inventory
• An earthquake in central[CITY] substantially delays delivery
of equipment.
Potential Risk • Weak financial condition or operational capabilities for
Drivers suppliers L
• Failure in due diligence with suppliers
• Failure to enforce contracts
• Failure in supplier monitoring and communication 1-Low
• Failure in testing plans
• Transportation interruption 1-Low Likelihood 5-High
• Weather

Potential Risk • Schedule disruptions to multiple programs Risk Mgmt.

Consequences • Higher costs Results Impact Likelihood Exposure Capability Gap
• Potential need to invest in existing suppliers or work with 2014 2.06 2.47 2.26 3.65 -1.38
alternative suppliers
• Potential need for exception to financial, operational and Adjust - - - - -
quality standards Final
• Degraded competitive position

Risk Owner • TBD

Risk Plan Status • TBD

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Detailed Results
N – Quality Issue

Risk Exposure Map

Risk and Quality Issue – A significant production quality issue impacts
Description customers or contracted prices
5-High
Potential • Production quality does not meet contract specs
Examples

Potential Risk • Geology issues

Drivers • Inadequate quality program execution
• Weak materials management

Potential Risk • Loss of customer confidence

Consequences • Loss of future business
• Delayed deliveries to customer

Impact
• Penalties and other financial losses
• Reputation damage with investors
• Degraded competitive position N

Risk Owner • TBD

Risk Plan Status • TBD

1-Low

1-Low Likelihood 5-High

Risk Mgmt.
Results Impact Likelihood Exposure Capability Gap
2014 2.65 2.94 2.79 3.88 -1.09
Adjust - - - - -
Final

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Appendix 3
Prioritization Criteria (1 of 2)

Risk Impact
Ranking Category Description
Cost impact greater than $[XX]M financial loss
Extended cessation of operations
Sustained loss of market position; Competitive landscape affected in the long term
5 Catastrophic
Near-term strategic objectives sidelined
Major national newspaper and television coverage
Regulator involvement
Cost impact between $[XX]-$[XX]financial loss
Two week operations interruption
4 Extreme Extreme impact on market position; Major impact on competitive landscape in intermediate term
Extreme impact on ability to meet near-term strategic objectives
Ongoing and sustained coverage by newspapers and analyst – Potential questions from regulators
Cost impact between $[XX]-$[XX]M financial loss
Week long operations interruption
3 Major Major impact on market position; Moderate impact on the competitive landscape in near term
Major impact on ability to meet near-term strategic objectives
Coverage by regional news and by analysts
Cost impact between $[XX]-$[XX] financial loss
Operations interrupted over several days
2 Significant Moderate impact on market position; Minor changes in the competitive landscape
Moderate impact on ability to meet near-term strategic objectives
Little or no coverage by news or analysts
Cost impact less than $[XX]M financial loss
Minor operations interruption
1 Minor Minimal impact on market position; Minimal changes in the competitive landscape
Minimal impact on ability to meet near-term strategic objectives
Little or no news coverage

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Appendix 3
Prioritization Criteria (2 of 2)

Existing Management Capability

Ranking Description
Significant resources are applied to effectively managing the risk. Articulation of risk management
5 Very Strong
objectives and capabilities is evident in operating plans and performance measures.
4 Strong Risk management objectives are well-understood and capabilities are strong.
3 Moderate Management has identified and communicated the required activities to manage the risk.
2 Limited Some management capabilities for the risk exist, but processes are informal or sporadically performed.
1 Weak Events tend to be managed as they arise. There is little to no focus on active management of the risk.

Risk Likelihood
Ranking Description Probability Examples
5 Very Likely 50%+ Once or twice each year
4 Reasonably Likely 25%-50% 1 in 2 to 1 in 4 year event
3 Unlikely 10%-25% 1 in 5 year event
2 Highly Unlikely 1%-10% 1 in 10 year event
1 Extremely Unlikely Below 1% 1 in 100 year event

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