Governance

Cairn's strategy is to deliver shareholder value through establishing commercial reserves in high-potential exploration sites around the world. In implementing this strategy, we focus on conducting all of our activities in a responsible manner.

Cairn's success in South Asia over the past 20 years has been achieved through:

• the confidence in our technical and commercial acumen;
• the ability to identify, assess and effectively manage uncertainties; and
• knowingly taking risks that are appropriate for the component parts of our business in pursuit of our vision.

More recently, Cairn has acquired a large acreage position in Greenland where it will seek to replicate its earlier and continued success in South Asia.

Since the IPO in early 2007, Cairn Group's activities in India have been managed by Cairn India, a majority owned subsidiary of Cairn Energy PLC. Beyond Cairn India, the Group manages its operations through its unlisted, wholly owned subsidiary Capricorn. Cairn's strategy for Capricorn is delivered by an asset-led matrix organisation, applying a business management system that includes CR, technical and operational procedures.

CR & Risk Management in Cairn

The Board has overall responsibility for defining Group CR Policies and Guiding Principles, maintaining and seeking improvement to the Group's CR performance, and ensuring effective policies and management systems are in place to manage CR risks in the business.

The Board is made up of six executive directors and six independent non-executive directors, including a non-executive Chairman. Board members with specific responsibilities for CR include:

• Mike Watts (Deputy Chief Executive), who has responsibility for providing assurance to the Board on HSE (including climate change), community and human rights matters;
• Malcolm Thoms (Chief Operating Officer), who has responsibility for security matters; and
• Jann Brown (Finance Director), who has responsibility for employee matters.

Day-to-day responsibility for implementing the business management system lies with the executive directors, while the Chief Executive's Committee (CEC) reviews and agrees strategy.

The CEC is advised on CR matters by the Group CR Committee, which is chaired by the Deputy Chief Executive, and comprises executive directors and key heads of department. The Group CR Committee regularly reviews Cairn's CR Policies, Guiding Principles and management systems, CR performance, and CR risks and mitigation measures. CR risks are also fed into the business risk management process.

The Risk Management Committee (RMC) is responsible for ensuring an effective business risk management system on behalf of the Board. To achieve this, it receives regular updates on risk matrices and registers from the appropriate project, asset, country and corporate departments. More detail on Cairn's approach to risk management is provided in the Risk and Internal Control sections of the Corporate Governance Statement in the Annual Report and Accounts 2009 on pages 32 and 59.

Cairn India

Cairn India has an integrated internal control and assurance framework, overseen by the Cairn India Board. This includes three Cairn directors who sit in a non-executive capacity (Sir Bill Gammell as Chairman, Jann Brown and Malcolm Thoms). The Cairn India Board receives regular updates on CR matters and performance.