Industrial gas company BOC Group is setting up a series of risk management workshops to educate its senior management about how to control risk. The workshops might open the door to the use of new products, such as weather derivatives, according to Bill Connell, director of risk management in Windlesham, U.K.
Connell said the workshops will take two forms. There will be a strategic risk workshop in April at which the company's senior management will discuss risks across the board, and there will be workshops with each of the 30 business units to discuss project risks. The strategic workshop is likely to look at using new products, such as weather derivatives. The decision on whether to use the product will be taken after a study on the company's exposure to weather and the quality of the derivatives as a risk mitigator.
The business unit workshops will consist of risk managers and 12-18 managers from the business concerned. These will look at the risks each department has, such as managing resources, and suggest ways of limiting or exploiting them. The managers of the business units remain in control of how risk is managed. Connell expects the workshops to meet annually.
BOC Group has a turnover of GBP3.9 billion (USD5.73 billion). The company uses interest-rate swaps and foreign exchange derivatives for hedging.