Subsaharan Atlantic Energy Ltd
OilField Exploration & Production
Sub-Saharan
Atlantic Energy
Risk Management
Subsaharan Atlantic Energy Ltd is exposed to several risks as with every business. Some of these risks are detailed below
Technology leadership
The oilfield services sector is very large and competitive. Inability to remain inventive can affect our market relevance. This could translate into our failure to maintain, defend, or increase the prices of our products and services. To mitigate the impact of this risk, we reiterate our commitment to research and development and will take deliberate steps towards achieving our objectives.
Failure to Retain Key Technical Skills
A key risk facing our business is the ability to retain skilled and experienced staff. We have a rich internship base where the best are identified whenever there is a need to shore up manpower, with less reliance on certificates. Instead, proof of competence is emphasised as the basis of employment.
Cybersecurity Risks & Threats
Globally, extortion and non-extortion based cyber threats are evolving and growing at an alarming rate. Some organisations that were victims of the well-known WannaCry ransomware in 2017 through 2018 never regained business momentum to journey into 2019.
Our company relies heavily on information systems, hence exposure to cybersecurity risks and threats. We have continually ensured that the best systems and processes are always in place to forestall potential cybersecurity attacks.
Liquidity Risks
Liquidity risk is the potential loss arising from the company’s inability to meet its obligations as they fall due or its inability to fund increases in assets without incurring unacceptable costs or losses. Liquidity risk is, however, not viewed in isolation, because financial risks are not mutually exclusive and liquidity risk is often triggered as a result of other company risks like credit, market, and operational risks. We are currently managing this risk through our well-defined monitoring and control processes that ensure we maintain balance across the organisation.
Operational Risks
Operational risk is the risk of loss resulting from inadequate or failed internal processes and systems or from external events, including legal risk and any other risks that are deemed fit on an ongoing basis, excluding reputational and strategic risk. Operational risk exists in all products and business activities. Operational risk management objectives include: provision of clear and consistent direction in all operations of the company; provision of a standardized framework and guidelines for creating and managing all operational risk exposures; and enabling the company to identify and analyse events (both internal and external) that impact the business.
Disaster recovery procedures, business continuity planning, self-compliance assurance, and internal audit are operational risk management strategies being considered. There was, however, no significant financial loss resulting from operational risk incidence during this period.
Strategic Risks
Strategic risk is a possible source of loss that might arise from the pursuit of an unsuccessful business plan. Strategic risk examines the impact of the design and implementation of business models and decisions on earnings and capital, as well as the organisation’s responsiveness to environmental and industry changes. We have established processes and procedures to ensure that the right models are employed and appropriately communicated to all decision makers in the company on issues relating to strategic risk management. This has driven the company’s sound culture and performance record to date.
Legal Risks
Legal risk is defined as the risk of loss due to defective contractual arrangements, legal liability (both criminal and civil) incurred during operations, the inability of the organisation to enforce its rights, or failure to address identified concerns to the appropriate authorities where changes in the law are proposed. The company manages this risk by staying abreast of extant and new legislations, decisions of courts of competent jurisdiction in Nigeria, international law and conventions, existing company contracts, creating awareness on critical legislations among employees, identifying significant legal risks, as well as assessing their potential impact.
Legal risk management at Subsaharan Atlantic Energy Ltd is also being enhanced by appropriate product risk review and management of contractual obligations via documented service level agreements and other contractual documents. It is further managed by the engagement of an experienced legal consultant to serve as adviser on contractual and legal matters. So far, we have not incurred any legal liabilities.
Taxation Risks
Taxation risk is the chance that tax rules may change, resulting in losses due to higher than expected taxes. We mitigate taxation risk by monitoring applicable tax laws, maintaining operational policies that enable the company to comply with taxation laws, and, where required, seeking professional advice from tax specialists.
Product Completion Risks
This risk could arise as a result of the inability to raise the required funding to complete the project or as a result of the inability to attract or retain the resources required for product development. We have managed this risk over the years by:
- Scheduling product development cycles to align with resource availability cycles
- Adopting stringent budget management in product development
- Considering resource availability in our product development project ranking
- Securing project financing facilities from lenders who have a clear understanding of our business needs
Product Acceptance Risks
This risk describes the ability of the product to penetrate the existing market and the resource requirements to distribute the product effectively in order to realize an appropriate cash flow. To mitigate this, we usually gather substantial market intelligence to ensure that our products meet market expectations and industry standards. We also apply client feedback in the continuous improvement process of our products. In addition, we have formed strategic alliances with companies that have useful market networks.
Intellectual Property Risks
Our technologies and software are proprietary, and we have a dynamic framework to protect our intellectual property rights at all times. Currently, we do not have any infringement on our intellectual property rights. Likewise, we have not infringed on any third-party proprietary rights. Subsaharan Atlantic Energy Ltd does not currently have any infringement of its copyrights, trade secrecy rights, or other intellectual property disputes in the development or support of its products.
Geographic Concentration Risks
Limiting a business operation within a single geographic location could pose a concentration risk.
Insecurity & Community Restiveness
Community restiveness and insecurity is a threat to businesses in Nigeria, especially in the oil and gas industry. We have, however, put in place a community relations management framework that ensures we stay responsive to our host communities, thereby earning their trust at all times. Our community relations team also prioritises its intelligence-gathering network to ensure proactive measures are taken to protect our people and properties from potential security threats. As a proactive measure, we ensure that we manage after-work meetings and external activities with a very high level of security awareness.
Limited funding for business growth
Limited access to funds to support growth initiatives could constitute a critical business risk as it may impede the overall growth of the business. To mitigate this risk, we have instilled a prudent fund management process that eliminates wastage, compels transparency, and accountability. We have also adopted a capital mix structure that is skewed towards optimal profit retention. Furthermore, we enlist specialist services where external funding is required.
Management structure risk
At Subsaharan Atlantic Energy Ltd, we are of the conviction that the sustainability and viability of every business is a function of the quality of its management. Without experienced and competent management, the risk of business failure is imminent. Bold steps have been taken to man our management positions with experienced and competent people operating within a streamlined, efficient framework.