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The Corporate segment covers the non-operating activities supporting Shell. It includes Shell’s treasury organisation, its headquarters and central functions as well as its risk management and self-insurance activities. All finance income and expense, as well as related taxes and exchange-rate effects, are included in the Corporate segment earnings rather than in the earnings of the Business segments. The Corporate segment earnings also include functional costs that have not been allocated to the other segments.

TREASURY

The holdings and treasury organisation manages many of the Corporate entities and is the point of contact between Shell and the external capital markets. It is centralised in London and supported by regional centres in Singapore and Rio de Janeiro. Its daily operations include liquidity management, advising and financing subsidiaries and joint ventures, arranging the efficient investment of any surplus funds, transacting foreign exchange and managing Shell’s bank account infrastructure. The treasury organisation maintains Shell’s credit ratings and debt platforms, issues short- and long-term capital-market instruments and executes the Royal Dutch Shell dividend, scrip and share buyback programmes.

HEADQUARTERS AND CENTRAL FUNCTIONS

Headquarters and central functions render services to the Businesses (Upstream Americas, Upstream International, Downstream, Projects & Technology) as well as other functions. They also provide support for the shareholder-related activities of Royal Dutch Shell. The services they render cover the areas of finance, human resources, legal advice, information technology, real estate, communications, health, security and government relations. They also assist the Chief Executive Officer and the Executive Committee. The central functions have been increasingly supported by business service centres located around the world. These centres process transactions, manage data and produce statutory reports, among other services. The majority of the headquarters and central-function costs are recovered from the Business segments. Those costs that are not recovered are retained in Corporate.

RISK AND INSURANCE

The BP Deepwater Horizon incident was a harsh reminder of the vital importance of effective risk management in the oil and gas industry. At Shell, we aim to drive down the total cost of risk by using robust methodologies and processes to assess, mitigate and manage risk. They include the valuation of risks so that this can be properly taken into account in decision making. It also requires the causes of losses experienced to be analysed and understood so that they can be reduced in the future. To support this, Shell’s insurable risks are mainly aggregated and retained within insurance subsidiaries, which means that Shell self-insures most of its risk exposures. The insurance subsidiaries form a key part of the Shell’s approach to risk management. They provide insurance coverage to Shell entities, up to $1.15 billion per event, generally limited to Shell’s percentage interest in the relevant entity. The type and extent of the coverage is equal to that which is otherwise commercially available in the third-party insurance market.