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I LATINAMERICAN FORUM

Governance, Risk and Compliance in the Oil and Gas Sector

Panel 4: Corporate Risks

Rio de Janeiro, 11/13/2014

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Contents

1. External Environment

2. Petrobras at a Glance

3. Risk Management Area

4. Challenges for the Risk Management

1. External Environment

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FDIC

ISO Foreign Corruption Practice Act (FCPA)

"Basel I Accord"

COSO

CadBury

G‐30

Kun Trag

CoCo ANZ

COBIT                                                                    

"Basel I Amendm

ent"

Resolução BA

CEN 2554

Turnbull

Basel II

Sarbanes‐Oxley

COSO

 II ‐ ERM

Partnering Against Corruption Initiative

Guia IBGC

ISO 31000

Deliberação CVM

 604/ CVM 480

UK Bribery Act

Instrução 552 CVM

Lei 12.846 (Anticorrupção)

1933 1947 1977 1988 1992 1993 1994 1995 1996 1997 1998 1999 2001 2002 2004 2007 2009 2010 2014Quebra do Banco 

Barings

Quebra LTCM

Falência da Enron 

e WorldCom 

Risk management appears historically as “best practices" in response to key events in thebusiness environment ...

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… and actually evolve by the recrudescence of the regulatory environment in response to hugerisk events

2. PETROBRAS at a Glance

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PETROBRAS Today

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PETROBRAS’s Strategy: Choices of an Integrated Energy Company

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2014-2018 BMP: PETROBRAS OIL AND NGL PRODUCTION CURVE IN BRAZILNew systems recently installed and under construction ensure future growth

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2014-2018 BMP: PETROBRAS OIL AND NGL PRODUCTION CURVE IN BRAZILNew systems recently installed and under construction ensure future growth

3. Risk Management Area

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AXIS 1: The Corporate Risk Management Area was created in November, 7th 2013 by the Executive Board…

Corporate and Downstream Compliance, Economic and FinanceUpstream

Corporate Risk Management

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All Petrobras Business Areas have a local Risk Management Area, but integration among those initiatives is a challenge.

Strengthen an integrated view of Petrobras risks business through identification,assessment and monitoring of relevant risks, in conjunction with the several areas and hissubsidiaries

Mission

Mains Attributions

• Identify and prioritize the risks that most impact the main goals of the company, supportingthe actions of the current BMP.

• Monitor and periodically report to the Directors and Board of Directors the impact of key risksin the integrated results of the Petrobras System;

• Stimulating the proposition of the Response Plans to major risks, with actions, timelines andresponsible in an integrated manner;

• Answer specific demands of senior management involved in the management of risk;• Provide opinions over the quality of risk analyzes performed by different areas when

assessing investment projects.

4. Challenges for the Risk Management

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AXIS 1: DirectionIn the new structure, Petrobras is releasing an revision of his Risk Management Policy

Highlights:

• Five Principles

• Ten Guidelines

• Management Structure and Responsibilities cleared defined

• 19 Mains Risks Categories (Tier 1)

• Glossary – 31 Common Risk Management Terms

• Up to 100 professionals involved

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AXIS 2: Transparency: Why don’t we disclose our risk management policies on websites?

We only disclose mandatory risk management information(Form 20F and Form 10K)

Many Brazilian companies disclose our risk management policies on websitesISO 31000 and COSO are common references to their policies.

Which Companies disclose the risk management policies?

And how oil companies behave?

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AXIS 3: IntegrationThe Corporate Risk Management Area acts over local risk management areas' interfaces

Corporate Risk Management

Financial Risk Management

Downstream Risk

Management

Upstream Risk Management

EHS Risk Management

Gas & Energy Risk

Management

International Risk

Management

… Risk Management

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AXIS 4: Decision bias

Which group of Companies has the biggest average revenue, according to the top100 Companies in sales in 2013 (Exame magazine) ?

GROUP A

GE AMBEV

UNILEVEROI

BAYER

GROUP B

RAÍZENVIA VAREJO

CRBSJBS

ATACADÃO

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“Risk is like fire: If controlled it will help you; if uncontrolled it will rise up and destroy you.”

Theodore Roosevelt