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In Statoil, understanding and managing risk is today considered a core value of the company that is written into the corporate directives and widely communicated to employees. ERM is thoroughly embedded in the organization's work processes, and its Risk Committee has managed the transition from a silo mentality to promoting Statoil's best interests in areas where risk needs to be considered. The company has introduced the concept of core risks, which are the risk exposures that the company needs to manage consistently vis-a-vis its investors and which therefore require central management. In several areas where risk management used to be pursued in a silo fashion, based on incentives existing locally in the organization, risk is now optimized from the perspective of the company as a whole. ERM in

Statoil is not a control function aimed at minimizing risk, but dedicated to the goal of maximizing enterprise value given both downside risk and upside potential.

Achieving these outcomes is by no means trivial, because it challenges the organizational status quo and forces people to think and act differently with regard to risk. Statoil's success in achieving these outcomes is largely explained by the diligent work of a few key individuals, who consistently over many years have pursued a risk management program that maximizes the value of the company as a whole, as well as the strong support of the executive officers and directors. The ERM program has involved changing people's attitudes toward risk, and making Statoil's enterprise value the metric that people are ultimately expected to pursue. It has also involved thoughtfully changing the performance evaluation systems in ways that address the potential conflicts of interest that result from centralizing risk management.


Alf Alviniussen is former Group Treasurer and Senior Vice President of Norsk Hydro ASA, Oslo, Norway. After 42 years in the company holding leading positions within the group treasury and corporate finance, including responsibility for risk management and financial planning, he is now acting as an independent consultant.

Hakan Jankensgard holds a PhD in risk management from Lund University, Sweden. He is the former risk manager of Norsk Hydro and has more than 10 years' experience in advising companies on their risk management strategies. He is currently a researcher in corporate finance at the Department of Business Administration and Knut Wicksell Centre for Financial Studies, Lund University.

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