Improving board assurance of technical and operational risks in mining

Abstract

There are gaps in board assurance on technical and operational risk in mining. There are gaps in current environmental social governance (ESG) and enterprise risk management, especially for geotechnical risk. Chief risk officers (CROs) and audit teams who report to the board’s audit and risk committee are often staffed by accountants and lawyers who provide an essential service, but may not appreciate the science, technology, engineering and maths (STEM) aspects of mining, including its technical complexity, variability and uncertainty. This demography tends to focus on commercial, financial and legal risk. Their skill sets mean they may have a blind spot on how STEM mining risks have an impact, including on company performance and innovation (opportunity risks). Additionally, with the digital transformation of mining underway, there is a risk the disrupting ‘digital natives’ (i.e. deep domain experts on digital technology) also lack an understanding of the technical and operational risks of mining and may inadvertently create new risks. Understanding risk in mining requires technical and operational expertise in mining engineering, life-of-mine planning, geotechnical engineering, geology and metallurgy. These professionals need to work alongside traditional risk practitioners and auditors to develop new ways to provide transparency, accountability and assurance to mining company boards.