This document presents a case study on BG Group and calculating risks in investment decisions. It provides background on BG Group, discusses factors to consider for investment decisions and sources of investment. It then covers the risks in the oil and gas industry, techniques for evaluating investments, and BG Group's financial performance from 2011-2015. It recommends properly calculating risks, carefully considering opportunities while observing the economic environment, and continuously improving through innovation.
3. AGENDA
Company Background
Investment Decisions
Sources of Investment
Ethical Elements
Risks
Performance of BG Group
Recommendation
Conclusion
4. COMPANY BACKGROUND
Name : BG Group PLC
Founded : 1997 (Demerger of Centrica)
2000 (Demerger of Lattice Group from BG Group)
Industry : Oil & Gas
Fate : Acquired by Royal Dutch Shell
Defunct : 15th February 2016
Headquarter : Reading, UK.
Products : Crude Oil, Natural Gas, Petro Chemicals
5. INVESTMENT DECISION
INVESTMENT
An investment is a monetary assets purchased
with the idea that the asset will provide income in
the future or will be sold at a higher price for a
profit.
6. IMPORTANCE OF INVESTMENT
Be prepared for emergencies
Financial Security
Fulfilling financial goals
Wealth creation
Fighting inflation
7. FACTORS TO BE CONSIDER BEFORE
MAKING INVESTMENT DECISION
Investment Objectives
Time
Risk Return Parity
Ethical
Elements
Investment
Diversification
Fund Availability
16. RISK
A probability or threat of –
• damage,
• injury,
• liability,
• loss, or
• any other negative occurrence
that is caused by external or internal vulnerabilities, and that may
be avoided through preemptive action.
In Finance : The probability that an actual return on an investment
will be lower than the expected return.
17. RISKS IN THE OIL AND GAS INDUSTRY
Political
Risk
Supply
and
Demand
Risk
Geological
Risk
Operational
Risk
Healthy,
Safety,
Security
&
Environ
mental
Risk
18. EXPERTS RESPONSIBLE FOR ADDRESSING
THOSE RISKS
Geologists and
Geophysicists
Engineers
HSSE managers
Economists
19. DIFFERENT WAYS TO MEASURE AND
QUANTIFY RISK
Standard
Deviation
Certainty Factor
Probability
distribution
20. EXPECTED MONETARY VALUE (EMV)
The expected monetary value is how much
money you can expect to make from a certain
decision.
The EMV calculation can be illustrated by a
decision tree.
21. EXPECTED MONETARY VALUE (EMV)
EMV = (NPV of success x chance of success)
plus
(NPV of failure x chance of failure)
22. DECISION TREE
Decision trees are a simple way
of choosing from alternative
courses of action when faced with
uncertainty.
27. RECOMMENDATION
Risks need to be calculate properly.
Investment opportunities need to be considered carefully.
Present and prospective economic environment should be
carefully observed .
Continuous learning and improvement through technology
and innovation .
Increase customer responsiveness , improve support after
service.
