Where Was BP’s Risk Management?
Posted by Caroline McDonald in Uncategorized, tags: blog, BP Risk Management“Where was the risk management?” asked PRIMA’s outgoing president, Ron Hayes.
Mr. Hayes, who lives and works as risk manager for the Calcasieu Parish School Board in Louisiana, has a lot to lose from this disaster. He spoke to me about it a few days ago at the Public Risk Management Association annual conference in Orlando, Fla.
Visibly upset by what is happening, and could happen to his state, he said that while he is aware that BP has a risk manager, he wondered how this could have come to pass. “We’re required to ID risks and have a plan in our school system. How was this allowed to happen?” After all, he said, a risk manager’s job is to identify risks–no matter the size.
The ramifications of the spill are huge, he said, not only for himself, but for his entire state and the region. From the governor on down, he added, Louisiana residents are angry. And with hurricane season looming, thoughts are on the possibilities a tropical depression could bring. Homes flooded with sea water and mud is a bad enough scenario. Mixing crude oil in with that water would be a nightmare. One underwriter told me that oil in a home or building would mean a tear-down rather than a renovation. Imagine the impact this could have on coastal real estate as well.
Mr. Hayes talked about the stench in some areas—of oil and dead animals and rotting vegetation wafting inland—and this is only the beginning. This huge plume is growing every day and could travel up the East Coast, according to reports.
Other risk managers I’ve talked to here are also puzzled. One risk manager told me he didn’t think this spill was getting the attention the Exxon Valdese in Alaska did. “But wait until it starts staining the sandy white beaches up the East Coast,” he said. “It’ll get attention then.”
BP is being criticized for paying out shareholder dividends and airing a national TV ad touting its environmental efforts.
I’ve seen the ad, portraying BP pulling out the stops to arrest the flow, clean up wetlands and save wildlife—and vowing to do everything possible to take care of the mess.
Meanwhile, Tony Hayward, BP’s executive director and group chief executive, declared he wants this all behind him so he can “get on with his life.” Tell that to the people who lost their lives in the blast, the fisherman without a livelihood and the coastal business owners. And tell it to the shore birds and animals losing their habitat and their lives.
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Ms. McDonald,
Being from Texas, I am familiar with BP. This is not the first time BP has made the news for shoddy safety measures. If you remember the Texas City Refinery explosion a few years ago, BP was fined for numerous safety violations and was found to delay maintenence on the refinery. Stories out on this disaster say that BP was wanting this hole completed as it was over budget and would not be completed on time. Certain drilling measures were not inplemented at the onset to save money. All a risk manager for an organization like BP can do is to reccomend what to do. Sadly some corporations see only $ signs going out the window when it comes to pre-emptive planning and implementing the measures. Sort of like a certain auto manufacture in the ’70’s who felt that a $20 fix was more than what a life was worth.
it is too early to comment on ‘where was bp’s risk management; what can be said is that if a business risk assessment was done + business continuity plan + emergency response plan, it didn’t work quite right! it is important for bp to now communicate effectively in order to try and build confidence and trust; this incident is a lesson to be learned for all businesses, whether they be owner-operator, small, medium or large; businesses in general have to be made aware of their risks, and then be motivated to initiate proper policies and procedures to manage and mitigate those risks; businesses also have to consider their LEGAL risks, since those risks are ones that are often overlooked;
I just finnished reading your column in National Underwiter.
I enjoyed reading your blog posts.
Good work.