When Disaster Strikes : Bp 's Risk Management Failure Essay

Identify the potential risks which affect the company and manage these risks within its risk appetite;

* There are three (3) schools of thought regarding risk. The first considers the positive and negative aspects of risk, but sees them as separate. The second group believes that there are benefits from treating threats and opportunities together, while the third school does not label uncertainties, but addresses uncertainty as part of “doing the job.” Argue the value of having a risk strategy despite the cost associated with it. Include an example to support

MEJRI, Mohamed, and Daniel DE WOLF. 2013. "Crisis Management: Lessons Learnt From The BP Deepwater Horizon Spill Oil". Business Management And Strategy 4 (2): 67. doi:10.5296/bms.v4i2.4950.

On April 20, 2010, 11 men died, and dozens more were injured (Hoffman, 2010). A horrific disaster happened on the BP Deepwater Horizon drilling platform where an explosion on the rig killed 11 workers and led to over 4 million barrels of oil leaking into the Gulf of Mexico, one of the largest oil spills in history (Hoffman, 2010). The oil company BP did many things wrong both before and after this devastating disaster. BPs self-entitled, hubris CEO and Corporate lead to a historical trajectory for the crew of Transocean's Deepwater Horizon. BP had given a pathetic response to the disaster trying to make It seem that it was not as bad as it was, all to ensure it still made more money and its stakeholders were not unsettled by it.

In 2010 on April 20th the Gulf of Mexico had seen the worst environmental disaster the world had ever seen. It started as an explosion on a BP oil rig that took the lives of 11 people and injuring 17 while leaking "...at least 3 million barrels of oil..." (Bryant & Hunter, 2010, para. 2 This was not the first accident that has happened to BP but, certainly the most costly. In 2005 there was an explosion at a refinery in Texas that killed 15 and injured over 180 people (Bryant & Hunter, 2010). They ended up paying over "...2 billion in damages and lawsuits" (Bryant & Hunter, 2010, para. 5). With the 2005 incident, BP had cut costs in their operating budget and also lowered the safety standards of the company (Bryant & Hunter, 2010). There

BP, a leader in deep water oil drilling efforts, triggered the worst environmental disaster in America’s history, when on April 20, 2010 a gas release and subsequent explosion occurred on the Deepwater Horizon oil rig. The oilrig, which BP was leasing from Transocean, a Swiss company, was operating on the Macondo exploration well, which is located roughly 50 miles southeast of the Louisiana coast in the Gulf of Mexico. The explosion killed 11 workers, and injured 17 others, and dumped an estimated 205 million gallons of oil into the Gulf of Mexico.

BP tends to make bets that others don’t which is most likely why the disastrous deep water horizon oil spill occurred in the Gulf of Mexico five years ago. The fire burned for 36 hours while hydrocarbons leaked into the gulf before the well was sealed, unfortunately eleven individuals died. It has been difficult for BP to be the best company right now since this falling and they have been in reparation mode since this catastrophe. However, BP is now incorporating high safety and showed everyone that they are very reliable on the recovery of this hardship of BP trying to mix oil with water. BP came together to control the situation, cleanup, and diminish as much contamination as possible into the gulf. In addition, they are devoted long term to improve the Gulf of Mexico’s bionetwork and promise to be more careful so this will not happen again.

The BP oil spill on April 20, 2010 was more than barrels of oil released into the Gulf. The accident involved a gas release and an explosion that killed 11 men and injured others. Each time this oil spill is spoke of, there is a monetary cost associated with it. This disaster will have a cost associated for decades to come. The main cost will be the loss of life and the effects it will have on the families, co-workers and friends of each man that lost his life. BP will continue to speak of policy changes and new safety features. They will continue to promote themselves as a forward thinking company with many great ideas for the future. The sad part is BP’s forward thinking has been mostly about profit. The hefty fined levied

The key causes in the BP disaster case include the lack of oversight on management. There were many warning signs but they were ignored (Kreitner & Kinicki, 2013). BP wanted to complete the Gulf of Mexico project because it was running weeks behind schedule and over budget. BP wanted to complete the well so they started making shortcuts that contributed to the disaster and oil spill. On April 20, 2010 there was an explosion and it was one of the worst disaster America has ever faced. The disaster killed eleven individuals working on the oil drilling platform, and caused about four million barrels of crude oil to dump into the Gulf of Mexico (Iaquinto, 2012). A dangerous buildup of gas in the well caused an explosion and fire that destroyed

Prior to this incident BP had major industrial accidents that killed employees and/or spilled oil in the environment. Reports suggesting that the top management of BP gave importance to operating cost cutting measures over safety and risk evasion. This ultimately lead to such catastrophic incident. (Bryant, M. and Hunter, T., 2010)

In such a delicate time as this, the public needs reassurance and information. They want

Prior to the Deepwater Horizon oil spill of 2010, BP had a positive reputation for promoting corporate sustainability and creating sustainable energy. In the wake of the oil spill, however, BP proved that it was not on the right track despite the proclamation to its constituents of the exact opposite. There is a popular adage “almost doesn’t count.” BP’s investment in research directed toward minimizing negative environmental impact while conducting business and accomplishing major undertakings such as the Forties Field and Trans-Alaska pipelines was a move in the right direction. BP’s follow-through with the declarations the company made to its stakeholders was severely lacking, however, and proved to be detrimental. The company admitted to failures and oversight in its Risk Management sector such as failing to have a remote shut-off switch, cutting corners to save time and money, faulty wiring, a dead battery, a bent pipe, and its failure to closely monitor a company that had a history of being responsible for other oil spills and disasters among other faults. A 166-page report issued in 2014, four years after the spill, determined that both BP and Transocean failed to adequately inspect safety systems despite suggestions made to do so. Both companies opted to follow an industry standard which was not adequate. This decision was not in the best interest of affected parties and further proved to be injurious to BP. Numerous equipment issues were found in the

BP leadership along with partners did not have proper governance and process to evaluate the risk that they are willing to take. The employee at every level does not know how much risk to take nor did any corporate policy exist to guide them. Having zero risk tolerance and zero safety defects in these complex operations ensure there are no human losses. The analysis of the Deepwater Horizon Study Group (2011) (p.11) shows that the leadership was concerned about how much money was spent in excess and did not address previous violations or preventive steps. Instead of downplaying, BP could have accessed the situation, analyzed, and communicated just before and after the explosions from an organizational behavior perspective. Communication is an important tool and basic needs of any organization to effectively discuss or write to their employees, clients, external vendors, and the government to govern internal process and enhance its customer experiences.

BP (British Petroleum) is one of the leading companies that are delivering energy products and services to the people around the world. In this report, we studied BP’s risk management plan for preventing oil spill. The main reason for choosing BP and its oil spill preparedness plan is that the oil companies have become increasingly vulnerable to unwillingly cause disasters and BP is one of them. An event that highlighted this vulnerability and subsequently drew attention to the need to investigate, is the BP oil spill in 2010 was one of the worst oil disasters that affected environment adversely. Issues such as these have been a serious concern for the oil companies around the world.

Deepwater Horizon was the name of the oil rig that was at the center of the Macondo Well Project that led to the largest marine oil spill in the history of the United States. (Ingersoll, Locke, Reavis; 2012) The loss of life, injuries to others, and damage to environment is tragic, however the management of BP before and after the disaster was disastrous. Proper leadership before could have helped prevent the explosion and leadership after could have helped with the cleanup and containment.