I.

Background of the Case

Chevron, being a major oil company that exists internationally, has to deal with a lot of
operational risks every day. It has been the company’s commitment to initiate projects that
mitigate these risks/problems to provide
Committed to:
Sustainable natural environment,
human health, and
corporate profitability.

Chevron, with its operation, is aware of the potential harm that a variety of factors could do to
the environment. Just a single mistake of mishandling the oil at any stage in production can have
negative impacts on the health and safety of the people or their employees, to the environment,
and to corporate profitability. The cost of corrective measures taken to rectify a mistake like this
is very huge and may also damage the brand name even after controlling the damages.

II. Statement of the problem

Chevron Corporation is committed to “Protecting the People and the Environment” which calls
for effective processes, leading technologies and dedicated people.
This study aims to answer the following questions:
1. What are the tools Chevron Corp used to assess and manage its environmental risks?
2. What are the the pros and cons of using such tools within the context of Chevron's overall
system for environmental risk management?

The company invested a lot of money on operational costs and expenditures aimed at reducing
its environmental burdens. But like all other companies, Chevron have to be prudent on its
spending with its managing risk measures.
Also, historically, the company’s approach to Risk Management is “more judgmental than
analytical”.
With the tension between risk and cost and how its operation is affected, Chevron executives are
contemplating the use of quantitative decision tools that enable operating managers to assess or
compute rough benefit-cost ratios for various alternative risk management projects.
III. The Alternative courses of action to address the problem
Traditional Tools and Processes for their Internal Risk Management
1. Policy 530 – The most important instrument by which Chevron manages environmental
risks internally. It is a guiding principle with detailed processes guide
2.

Development of Analytical Environmental Risk Management

DEMA – tool that can help managers, on a cost-benefit basis, set priorities for different
environmental projects.
IV. Recommendation

V. Key takeaways in the case study (that can be applied to my career)