Case | HBS Case Collection | March 1999 (Revised April 1999)

Environmental Risk Management at Chevron Corporation

by Forest L. Reinhardt, Monica M Mandelli and Jennifer Burns

Abstract

Chevron Corp., headquartered in San Francisco, manages a worldwide, vertically integrated value chain from the oil well to the gasoline station. Mishandling of oil at any stage of production can damage the natural environment, human health, corporate profitability, or all three. But at the same time Chevron needs to be prudent about the amount of money it spends on measures to manage these risks, and environmental programs within the firm can conflict with a long-standing tradition of decentralized management. To manage risks more efficiently, Chevron executives are contemplating the use of quantitative decision tools that enable operating managers to compute rough benefit-cost ratios for various alternative risk management projects. The case focuses on the pros and cons of using such tools within the context of Chevron's overall system for environmental risk management.

Keywords: Risk Management; Risk and Uncertainty; Environmental Sustainability; Energy Generation; Supply Chain Management; Metals and Minerals; Management Systems; Management Teams; Trade; Vertical Integration; Energy Industry; Mining Industry;

Citation:

Reinhardt, Forest L., Monica M Mandelli, and Jennifer Burns. "Environmental Risk Management at Chevron Corporation." Harvard Business School Case 799-062, March 1999. (Revised April 1999.)