LONDON -- As one of the world's leading natural gas and oil businesses, BG Group (LSE: BG.L) is a company with very definite attractions. A £36 billion FTSE 100 (UKX) constituent, last year it earned a pre-tax profit of $7.6 billion on revenues of $21 billion.

And with margins like that, no wonder this business is popular with many investors. With its shares changing hands today at 1,069 pence, the company is rated on a prospective price-to-earnings ratio (P/E) of 12, and offers investors a modest forecast dividend yield of 1.6%.

But how safe is that share price? And -- of vital importance to income investors -- how safe is that dividend? In short, how could an investment in BG Group adversely impact investors' wealth? Just this month, for instance, BG's share price crashed 17% over worries about slowing production and an over-reliance on one country.

In this series, I set out to answer just these questions. My starting point: BG Group's latest annual report, where the company's directors are obliged to address the issue of risk.

Risk management
One immediate thing that I'm looking for is an acknowledgement that risks do exist, and that they need managing.

The good news? As you'd expect from a business of BG Group's size and caliber, the company has in place a risk management policy, a system of regular reviews, and a number of high-level committees tasked with monitoring the risks that the business has identified.

But what, precisely, are those risks that the company faces?

Read the small print, and BG Group identifies no fewer than 18 risks as having a significant prospective impact on the company's financial performance. They range from regulatory risks to political upheaval, and from funding constraints to climate change.

So let's take a look at three of the biggest.

Funding Brazil and Australia
Undeniably, BG Group is making some big bets on specific countries. Indeed, it expects 40% of its production to come from Brazil by 2020, where it has stakes in all five of the exploration blocks in an oil and gas field that is anticipated to match the North Sea at its peak within a decade. Australia, likewise, shows a lot of promise.

But funding that development will be expensive, and selling downstream assets -- as the company has been doing -- only goes so far. As the company puts it: "BG Group is delivering and financing the largest capital investment program in its history. Funding these major capital projects will need to be underpinned by strong cash flows from operating assets, as well as access to capital markets as required."

What is BG doing about it? As noted, asset sales should meet the $5 billion target the board has set. In addition, fund raising in 2011 successfully raised more or less the same amount through bond issuances, demonstrating the attractiveness of the Group's credit to fixed-income investors.

Even so, as the company notes: "[The] major capital projects in [our] investment program are inherently complex, technically demanding, and require effective management of a wide range of stakeholders. As with all of BG Group's projects, de-risking of the capital program remains a key focus area for the Board and executive management."

Catastrophic accidents
You only have to look at the billions of dollars in fines and compensation that oil and gas giant BP (LSE: BP.L) (NYSE: BP) has had to pay out to see the dangers of the business that BG is in.

Just last week, BP agreed to pay a fine of $4.5 billion -- the largest in American history -- in relation to the Gulf of Mexico disaster. The latest estimate that I've seen is that fines and compensation will cost the oil giant at least $42 billion. So could the same happen to BG Group? As the company puts it: "Oil and gas exploration and production activities carry significant inherent risks, especially deepwater drilling and operations in high pressure/high temperature wells. Major accidents or incidents and/or the failure to manage these risks could result in injury or loss of life, damage to the environment, and/or loss of certain facilities, with an associated loss or deferment of exploration, production and revenues, as well as costs associated with mitigation, recovery and compensation."

Naturally, with the sobering object lesson of BP in front of it, BG Group has plenty of incentive to avoid going down that route itself. "Asset integrity and safety are overriding priorities for BG Group," it says, primly.

Management systems and tools are in place to help it manage risks in these areas, while the company's mandatory health and safety and asset integrity standards are regularly reviewed to ensure they are in line with industry best practice, and are embedded in the organization.

Finally -- and again with the lesson of BP in front of it -- contractor management is seen an essential part of good safety management. Accordingly, BG seeks to ensure that its worldwide contractor community understands and applies the company's safety culture and processes to their own operations.

Commodity prices
Fairly obviously, BG Group is in the commodities business -- and commodity prices are notoriously variable. As the company puts it:

BG Group's cash flows and profitability are sensitive to commodity prices for natural gas, crude oil, liquefied natural gas and other hydrocarbons. The Group's exposure to commodity prices varies according to a number of factors, including the mix of production and sales. While industry costs tend to rise or fall with commodity prices in the long term, there is no guarantee that movements in sales prices and costs would align in any year.

How is this risk dealt with? While BG Group's sensitivity to oil prices is set to increase due to the contribution from significant oil-related revenues, notably from Brazil, the company's portfolio also includes a range of long-term gas contracts that are not directly or immediately linked to short-term changes in commodity prices. In addition, some purchase contracts for liquefied natural gas contain provisions under which the gas suppliers share price risk with BG Group.

Risk vs. reward
Two superstar investors who are well-used to weighing risks are Neil Woodford and Warren Buffett.

On a dividend reinvested basis over the 15 years to Dec. 31 2011, Neil Woodford delivered a return of 347%, versus the FTSE All-Share's distinctly more modest 42% performance. Warren Buffett, for his part, has delivered returns of over 20% per annum since 1965, transforming himself into the world's third-wealthiest person.

Each, as it happens, is the subject of two special reports prepared by Motley Fool analysts. And they're yours to freely download, without any obligation.

So click here to download this free special report profiling the investment logic behind eight of Woodford's largest and most successful current picks.

And click here to discover which beaten-down British share Warren Buffett has been buying of late -- and why he bought it, and the price he paid.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.