Risk Management

Assessing, Monitoring and Reducing Risks


A world leader in liquefied petroleum gas LPG shipping

Audit Commitee Oversees Risk Management

The Audit Committee is the main responsible body for oversight of risks identified, including climate-related risks. 

The ISO 31000, COSO ERM Framework and Task Force on Climate-related Financial Disclosures (TCFD) Framework serve as the foundation for our Enterprise Risk Management (ERM). Our risk management process involves the use of a risk matrix which helps with risk assessment, risk monitoring, and efforts to reduce risks. 

The Task Force on Climate-Related Financial Disclosures (TCFD) guides our understanding on risks and opportunities that may arise from climate change. We have integrated climate-related considerations into our ERM as an aggravating factor for the risks listed in our risk universe and our existing risk management framework and processes include this and all related considerations. This ensures that the increasing relevance of such factors are properly considered. More details on ESG related risks can be found in our Integrated Annual Reports. 

Decarbonisation trends in the near-term present transition risks and opportunities to expand and evolve business offerings along the energy value chain. In the long-term, physical risks could have substantial implications on our business activities. We are progressively building competence to understand and meet these climate-related risks. We also assess our risk framework, policies, and procedures regularly to ensure that we have appropriate and effective risk management and mitigation efforts in place to support our corporate strategy. 

Risk Assessment

Identification Risks are identified in the course of business operations and added into our risk universe.




Strategic and External

Risks associated with global markets and economy, geopolitical stability, climate, decarbonisation, cyber and data security. 

Strategic and External

Addressed by business strategies managed through company’s annual strategy review.

Strategic and External

The Executive Management reviews assessment of risks to ensure that the intended and actual business direction are reflected in corporate strategic planning which is presented and endorsed by the Board of Directors.

Regulatory Compliance

Risks associated with i) ethical behaviour of employees and third parties; ii) security of sensitive  information; and iii) laws and regulations, including climate-related regulations, sanctions and anti-bribery laws.

Regulatory Compliance

Regular monitoring and mandatory awarenesstraining, compliance reviews, legal due diligence, and internal audits.

Regulatory Compliance

Internal Audit and Compliance teams assess and updates a quarterly compliance and internal audit report for presentation to the Audit Committee.

Commercial and Operational

Risks related to events occurring during planning and execution of business operations. This includes but is not limited to cargo and asset loss or damage, counterparty default, crew injury, or environmental damage

Commercial and Operational

Control measures are incorporated in operations and insurance planning, with ongoing monitoring during execution.

Commercial and Operational

Incidents and near misses are reviewed by business units and Management to ensure that root causes are comprehensively analysed. Suitable corrective actions are planned and implemented.


Risks relating to volatility of financial markets, including increase in interest rates, financial stress, counterparty risks and tax exposure.


Hedging exposures with financial instruments such as forex forward contracts, freight derivatives, interest rate and bunker swaps.


Executive Management actively manages risks with guidance and input from the Board of Directors.

Assessment Risks are assessed to understand probability of occurrence and impact to business 

Each year, a comprehensive risk assessment exercise is undertaken to assess the key risks faced by BW LPG through discussions with key department heads on risks that could impact our strategic objectives. These risks are assessed based on their potential financial impact, likelihood of occurrence in the short (0-2 years), mid (3-5 years) and long (> 5 years) term, and the effectiveness of the controls in place to mitigate them.  

Recording Risks are documented, prioritised and assigned to impacted departments 

The findings are utilised as an input in identifying the top risks for the company, with each risk analysed with the Executive Management. Some of these top risks have a direct or indirect correlation with our significant ESG (Environmental, Social, and Governance) topics. 

Mitigation Mitigation plans are prepared, translated into strategic priorities and implemented 

The adequecy of current mitigating actions are evaluated by the various business units, where gaps identified will be closed by improving measures or implementing new measures. 

MonitoringRisks are monitored in the course of business and operations

Besides this annual process, risks are regularly identified with best practice sharing available on our internal communications platforms for crew and employees. 

Reporting Quarterly review and reporting to Board of Directors on effectiveness of risk strategies

The results of the assessment are presented to the board as a component of the annual strategy development process where the Group’s risk profile is reviewed and guidance is provided on mitigation plans to ensure sufficiency of risk management actions and controls. 

Enterprise Risk Management

Top risks identified as having a potential to substantially influence our business and operations. 

Risk AreaClimate-related ConsiderationsMitigating Strategy
Macroeconomic and Market - Risks from geopolitical tensions can impact trade and supply chains.
- Challenges associated with entering new infrastructure markets.
- Risks from mis-timing market cycles when buying or selling assets.
- Global clean energy transition may impact LPG supply chain an
LPG demand.
- Global VLGC fleet size can fluctuate due to regulatory changes, shipping inefficiencies and new build orders.
- Unprecedented weather changes such as unusually long droughts can add market volatility and increase counterparty exposures.
- Expand into trading and value chain assets.
- Review and optimise
- Improve market
- Optimise operations and supply chain.
Regulatory- Growing industry related compliances
and business regulatory demands.
- We must address
additional compliance
requirements as we enter new markets.
- Impact from new global ESG regulations.
- Onerous emissions
reporting requirements.
- Additional climate- related clauses in
charter-hire agreements.
- Increased costs from use of fossil-based bunkers due to levies and limitations.
- Reduced service capacity due to slow-steaming.
- Early retirement of older inefficient assets.
- Increase in charterhire charges to cover rising operational costs and investments in technology.
- Provide training and
support on compliance
requirements and
regulatory changes.
- Build IT systems that can manage regulatory changes.
- Ensure accountability from all business units.
Human Capital- Challenges from more complex businesses and operations, and from
entry into new markets.
- Loss of qualified staff to competitors.
- We need qualified staff with specialised
competencies as shipping technologies evolve.
- Extreme weather is a
safety concern for crew.
- Failure to address
concerns can impact
operations and our license to operate.
- Enhance our knowledge by working with external
- Retain talent with a
positive work environment, by
emphasising diversity and inclusion, and by offering competitive
- Promote collaboration.
IT and Cyber- IT infrastructure
challenges, including
adapting to evolving
technology and use of data for compliance, risk management, and
- The increased use of
artificial intelligence (AI) raises concerns about potential security challenges and cyber risks.
- Rapid technological
developments can
outpace our ability to
harness new information,
resulting in inefficiencies
and non-compliance with regulations.
- Equipment may have to be retired prematurely, causing waste and incurring higher capital expenditure.
- We must be assured of data integrity and
competence with new
- Optimise and improve data input processes by
streamlining and
digitalising operations.
- Bolster in-house IT
expertise to improve
systems and data
- Conduct routine IT
controls and security
testing, and provide
training to foster
awareness of
cybersecurity measures and use of AI.
Financial- Higher trading volumes can increase earnings volatility.
• Unpredictable market fluctuations can impact profitability.
- Capital lenders may
reduce financing and
investments in shipping in favor of non-fossil based
- Higher liquidity risk
exposure and potential of downward asset repricing.
- Increased cost of
borrowing from declining investor base, and failure
to comply with
sustainability benchmarks.
- Conduct daily reviews and monitor positions to guarantee the availability of an adequate liquidity
buffer and compliance
with risk limits.
- Perform stress tests to assess potential financial impacts, considering base and worst-case scenarios.