Discussion on the internal control system development of oil companies based on risk management

Author of the article:YAN Bintao

Author's Workplace：Beijing Petroleum Machinery Co., Ltd., Beijing, 102206, China

Key Words：Risk management; Oil companies; Internal control; System development

Abstract：In order to cope with the increasingly complex external environment, minimize losses caused by risk events, and improve the management level, quality and efficiency of the companies, oil companies should establish a complete internal control mechanism as soon as possible. With the complete internal control mechanism, companies can develop a working mode with fully integrated internal resources, conforming to the strategic development needs and main business scope of the company. This paper analyzed the background and current situation of the internal control system development in Chinese companies, and discussed the development of the internal control system based on risk management, taking oil Company C as an example. In conclusion, the development of an oil companys internal control system should be based on the institutional system, with the implementation processes as the context, and should fully cover every risky link in the company operations, and nurture the internal control culture firmly into the hearts of all employee. Through “recognizing risks, plugging loopholes, and managing defects and consequences”, the internal control is “not absent, not offside, but firmly in place”. In this way, oil companies can achieve an seamless integration of effective management and control and ensuring efficiency, so as to have prevention as first step, control of risk if the event happens, and recovery after the event, to ensure its competitiveness in the market, and achieve the long term strategic goal of high-quality development.