Occidental Petroleum Corporation (OXY) prevailed in 2009 regardless of the state of the global economy and competition from larger companies. Focusing on long-term growth, Occidental aims to increase production and profits by acquiring local and global oil and gas reserves. They maintain their competitive advantage through the development of strong relationships with both local foreign counterparties. This is typically a difficult feat when faced with potential commodity, exploration, and political risks; however, OXY is profitable in their volatile industry by effectively managing these risks.
Despite the hardships most companies faced in 2009, Occidental Petroleum Corporation (OXY) persevered by concentrating on long-term growth. They worked to establish relationships with foreign counterparties enabling them to expand in the US, Middle East, North Africa, and South America. This is no easy feat since the latter countries pose threats due to unstable environments; however, Occidental is used to managing risk because they operate in a volatile industry that presents commodity, exploration and political risks.
With their global connections and regular monitoring of market activities, Occidental Petroleum Corporation proves they can be profitable by managing their risks. Occidental Petroleum sustains its billion-dollar earnings with a business model that emphasizes long-lived assets with long-term growth potential. They satisfy this model with their chemical sector of oil and gas. Operating in thirty-five countries, OXY continues to lead in the oil & gas exploration and production industry in cash flow per barrel.  This amounts to sizeable cash flows that exceed their typical expenses. 2] Furthermore, Occidental measures their success by their ability to maintain below-average debt levels, deliver returns in excess of its cost of capital and by achieving top quartile performance in relation to its peers.  Having developed strong relationships in numerous Middle Eastern countries, Occidental’s business model can thrive globally. 1 Occidental maintains their competitive advantages by managing engineering risk globally and political risk in the Middle East; however, they identify six key areas of risk, of which they must have a thorough understanding and effectively manage.
The key risks are as follows: exploration, engineering, commodity, political, reinvestment, and financial. 1 Due to instability in our global economy, Occidental’s primary risks lie in commodities, exploration and politics. Occidental is directly affected by volatile global and local commodity pricing. Unfortunately, there are myriad factors that influence price volatility, such as: changes in domestic and foreign economies, production disruptions, the actions of OPEC, et cetera. The competitive industry requires that they discover, develop or pay for additional oil and gas reserves. 
Exploration poses intrinsic risks that cost Occidental time and money, yet it is essential to their continued success. They compete with prominent oil companies and, worse, natural disasters—on a global scale. Occidental Petroleum Corporation is not only faced with market and environment constraints, but political as well. They are vulnerable to local and global regulations—many of which are dictated by unstable leadership. 4 With over half of their negotiations taking place in the Middle East, North Africa, and South America, Occidental risks confrontations with armed conflict, terrorism and EX/IM restrictions. 5] Moreover, these risks leave Occidental Petroleum susceptible to corruption. Despite their seemingly overwhelming risks, Occidental Petroleum manages them well enough to remain profitable.
The outcomes of Occidental’s endeavors are vulnerable to oil, natural gas and chemical prices; however, they manage this commodity price risk with the implementation of derivative transactions. In utilizing short-term futures, forwards, options and swaps, OXY has lessened its exposure to long-term price volatility and hopes to profit from price fluctuations in commodities. 6] Occidental then implemented a risk control policy to effectively monitor trading and marketing activities. Risk managers, who later divulge the Corporate VP, Treasurer and CFO of the results, impose the policies.  Said policy places limits on credit and trading, allocates duties, and provides price verifications. It is essential for Occidental to regularly evaluate these items because they have contracts with numerous counterparties around the world that pertain to their commodity, exploratory and political risks.