1. Recognise the difference between internal and external risks.

    The operator usually has the most power in a Joint Operated Venture ( JOV).  Contractually the Non Operator  has very little influence over the day to day working of the venture.  The Non Operator only has direct influence over the internal contractual risks with the operator. The operator is only held to account if it has been grossly negligent, or has intentionally mislead.

  2. Don’t maintain dual risks registers.

    By using effective project governance methods, make sure the operator manages venture risks by itself and reports these risks. The non-operator should only maintain a risk register of internal risks between the operator and the non-operator.

  3. Make sure you can audit the operator.

    The JOV should have a clause where the Non Operator can run a risk audit the operator at any stage during the venture.

  4. Add operator risk management as deliverable in the JOA.

    Operator risk management should be a deliverable stated in the Joint Operation Agreement (JOA), otherwise there will be a free-for-all where the Non Operator is reduced to cajoling the operator into performing risk management.

  5. Keep risk simple

    Risk management should never be a parallel process, which involves double handling; instead, risk management should add value to existing processes, using as little additional resources as possible.

  6. Eye on the ball

    Unless unchecked the risk management process can spiral out of control and becomes completely irrelevant. Keep a very pragmatic approach to risk. Keep it fresh and relevant to decision makers, by setting realistic objectives and boundaries. Never forget that risk management is all about giving information to decision makers so they can make informed choices.

  7. Know your operator.

    Run realistic risk based audits to find out in which risky areas the operator is superior/normal/inferior and then decide on an intervention strategy which could be:
    • Reactive (in areas where the operator is Superior)
    • Collaborative (in areas where the operator is Normal)
    • Leadership (in areas where the operator is Inferior)

  8. Know your JOA

    Very often many of the non-operators technical staff have no idea of the commercial scope and inherent risk of the venture, together with the obligations binding the Non Operator and operator together, and how the obligations will be monitored and executed. Call a risk review as soon as the JOA is made as the review defines which risks are within the remit of the Non Operator and the operator, thereby avoiding double handling.

  9. Be kind to engineers

    EP companies are often driven by engineers, at the working level and sometimes at board level. As a profession, engineers tend to be eternal optimists so see risks as engineering challenges to be solved, and are not therefor risks. This blind spot of risk can be very dangerous and needs to be talked through with some of the technical guys.

  10. Go with the flow.

    Being aware that the operator is a separate organisation with its own risk management system and procedures. Change for change’s sake is self-defeating and the Non Operator’s risk managers should work with the operator’s management systems, as far as possible.

  11. Sit at the Top Table.

    Irrespective of the audit results and the subsequent intervention strategy, as an absolute minimum, all the risks facing the JOA should be made available to the Non Operator. This usually involves a “place at the top table” where risks are identified and analysed be the operator. .

  12. Have red line and an exit strategy.

    In most cases a Non-operator should not take anything away from the day to day working of the operator, with the huge proviso that none of the operator’s actions will harm the business or HSSE interests of the Non Operator. If so the non-operator should immediately divest following an exit strategy, taking as much value out of the venture as possible.

  13. Nothing stays the same.

    Large JOVs can run for decades. Partners can change and the characteristics of individual risks are constantly changing, for example from strategic to operational and visa-versa.

  14. Use roadmaps

    Large JOV passes through many discrete stages.  Roadmaps with Decision Gates at each stage gives a structure to identify and treat risks.

If you have any more suggestions, please tweet or mail us with your thoughts and we will post them. Please remember to keep your suggestions simple.