Executive Summary
Business risk management has been a widely crucial tool for firms to include in their operations and its importance cannot be overlooked. In the case of British Petroleum (BP) Gulf of Mexico Oil Spill in 2010, there was negligence and lack in the contingency plan and response of the company to the risks that arose. It became evident in this analysis that BP’s manner of handling the incident had a massive financial implication that ensued negative public perception and company reputation and value.
The result of the analysis showed that BP could have had a better grip of the incident if they responded it with both a crisis communication plan and transparency. Their seeming indifference and unpreparedness reflected a perception worse than the incident itself to the public.
A further look at facts of the incident, analysis of the risk management issues and evaluation and recommendation of BP’s response to the crisis will be presented in this report.
Introduction and Aims
On the summer of 2010, the petroleum industry was shaken by one of the largest disasters in history known as the BP Deepwater Horizon Oil Spill. This resulted in the killing of eleven people, injuring of seventeen and an immeasurable damage to the ocean and the surrounding communities. BP had to immediately respond to the crisis and handle their financial and reputational risks.
The purpose of this report is to assess BP’s crisis management and communication plan to primarily analyze the possible failures in their response through a gathering of secondary data collected from various sources such as online journals, newspaper articles, blogs and case studies.
The researcher seeks to establish answers to:
1. What were the main risk management...
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The BP oil spill began with the explosion of the mobile offshore drilling unit known as the Deepwater Horizon, then operating in the Macondo Prospect Oil Field some 60 kilometers off the coast of the U.S. state of Louisiana, on April 29, 2010. The leak was capped on July 15, 2010, with a repair to the underwater wellhead ruptured by the Deepwater Horizon explosion. Thus, the BP oil spill lasted for about three months. During this time, roughly 5 million barrels of crude oil leaked from the wellhead into the Gulf of Mexico. The flow rate was not uniform, beginning...
At the end I come to conclusion that BP was not properly prepared for any disaster like that there risk assessment related to project is very limited and even not considered seriously about it for their own progress and putting live of public and employees in danger by not following the standard SOP of particular project. Even after incident happened they try to close their eyes on reality. The company should take this incident as alarm and should implement proper risk assessment for future and also compensate damages on ethical ground and if they counter this situation in good way their loss of bad reputation will be lesser as it predicted to be they should considered their responsibility towards society as well by doing this they not only making other people lives better but also earning good will to their company.
In my opinion, BP's response to the oil spill wasn't the best. Plus their spokesperson Tony Hayward's comments did little to help the situation. The response should have been about damage limitations. Hayward's responses made the company seem aloof and unconcerend about the environmental damage being done. When they gave an amout of barrels that were leaking into the ocean, they gave the wrong amount which hurted their credibility. They deflected the blame for the accident. BP would call the oil spill the "Gulf of Mexico oil spill" while the rest of the world called it the "BP oil spill." They might have took the blame but they said it wasn't their accident however they would take responsibility to clean it up even though it wasn't their fault. I think the fact that they used social media to show show updates and progress was a smart move since it is probably now the biggest media median. However, everything else was not the best way to handle this whole situation.
Weeks, Jennifer. "BP's Financial Pain From Spill Is Just Beginning." CQ Researcher 21.29 (2011): 688. MAS Ultra - School Edition. Web. 17 Feb. 2014.
This is not the first time that BP is at fault. They have had criminal convictions in places such as Endicott Bay in Alaska, Texas City and Prudhoe Bay. Jeanne Pascal was a part of the Environmental Protection Agency (EPA) and was assigned to watch over BP. Pascal was watching over companies such as BP that were facing debarment. Under her watch, BP was charged with four federal crimes. Over the past twelve years, Pascal’s seen BP patterns as misconducts. She attempted to warn the government about BP’s safety and environmental issues that would most likely lead to another disaster. While she was watching over BP, the company misinformed and misled her about things that resulted to the felonies that they have committed. Sensing that some things were not right about the company, she presented a case of their unsafe working environments.
“On March 23, 2005, at 1:20 pm, the BP Texas City Refinery suffered one of the worst industrial disasters in recent U.S. history. Explosions and fires killed 15 people and injured another 180, alarmed the community, and resulted in financial losses exceeding $1.5 billion.” (U.S. Chemical Safety and Hazard Investigation Board, 2007) There are many small and big decisions and oversights that led to the incident. Underneath all the specific actions or inaction is a blatant disregard for addressing safety violations and procedures that had been pointed out to BP even years before this event. The use of outdated equipment and budget cuts also contributed to the circumstances that allowed this accident to happen.
The Exxon Valdez and the BP oil spill were caused by different disasters but had just as great of effects. On March 24, 1989, the Exxon Valdez oil spill began to reek havoc on the Pacific Ocean. The oil tanker, Exxon Valdez, left from Valdez, Alaska and was headed for Los Angeles, California. The tanker ran aground on Bligh Reef in Alaska. After six hours of being grounded, the Exxon Valdez spilled about 10.9 million gallons of oil (53 million gallons aboard). The BP oil spill occurred a little differently. On April 20, 2010, the Deepwater Horizon oil platform exploded and caused the largest marine oil spill in history. The platform sank about 5,000 feet underwater. The BP oil spill poured 4.2 million barrels of oil into the Gulf of Mexico. These oil spills are largely compared but were cause by completely different events. They had similar effects/damage, however.
Nearly 25 years later, the lessons of the Exxon Valdez continue to resonate. In a times article, it is explained that oil spills effects politics because when it occurred at first, the measures taken to clean it up wasn’t as effective as it should have been. So when this happened a second time without many improvements from the earlier incident. This creates issues for the government because it has to create and implement laws about offshore drilling and even with that happening, there are still accidents, war, and terrorist
" Oil is the life blood of our modern industrial society. It fuels the machines and lubricates the wheels of the world’s production. But when that vital resource is out of control, it can destroy marine life and devastate the environment and economy of an entire region…. The plain facts are that the technology of oil-- its extraction, its transport, its refinery and use-- has outpaced laws to control that technology and prevent oil from polluting the environment…" (Max, 1969). Oil in its many forms has become one of the necessities of modern industrial life. Under control, and serving its intended purpose, oil is efficient, versatile, and productive. On the other hand, when oil becomes out of control, it can be one of the most devastating substances in the environment. When spilled in water, it spreads for miles around leaving a black memory behind (Stanley, 1969).
On April 20, 2010, the Deepwater Horizon oil rig, located in the Gulf of Mexico, exploded, killing 11 workers and injuring 17. The oil rig sank a day and a half later. The spill was referred to as the Deepwater Horizon oil spill, BP oil spill, Gulf of Mexico oil spill, and BP oil disaster. It was first said that little oil had actually leaked into the ocean, but a little over a month later the estimate was 12,000-19,000 barrels of crude oil being leaked per day. Many attempts were made to stop the leak but all failed until they capped the leak on July 15, 2010, and on September 19 the federal government declared the well “effectively dead.”
Crisis management is an integral part of any company’s strategic planning not only to prepare but also to mitigate the effects of a crisis on business continuity. In this discussion, I will design a crisis communications plan for Etihad Airways, which is the company that I have worked at for the past eight years. I will follow the outline of describing the organization first, and then the communication management team and crisis communications team, and the relevant external and internal publics. Subsequently, I will describe the crisis communication policies, strategies, techniques, and tactics; and, the required resources and continuous evaluation that are needed.
The communication process is not something that begins when a crisis rears its ugly head rather it is a process that takes place in preparing for a crisis before it happens. While the term crisis represents a blanket term used to describe many situations, each situation is unique, thus presenting different obstacles to overcome. However, with a well-established advanced plan in place an organization places itself in a position to overcome and work around obstacles. The development of a comprehensive crisis management plan is one achieved through effective communication where each member of the crisis management team has an advanced shared understanding of his or her role and responsibility during a time of crisis (du Pr'e, 2005).
The most effective crisis communicators are those who provide prompt, frank, and full. information to the media in the?eye of the storm? (Semio, 2004). The X-Files. Silence not only angers the media, but also compounds the problem.
Basically, the concepts of risk communication are partially aligned with the ideology of three-stage process of the model in terms of crisis communication and issue management. For instance, a Hong Kong famous beverages manufacturer, VITASOY, has raised public concerns of the taste deviation of Lemon Tea product in February 2014. In response to this crisis, VITASOY has published a media statement to the key stakeholders including customers, media and the retailers. ...
The BP Deepwater Horizon oil spill accident of April 20th 2010 that caused a gas release followed by the explosion that took place causing hydro carbons to leak into the Gulf of Mexico posed a lot of strategic implications in the competence, capabilities, internal resources and Corporate Social Responsibility of BP. The implications of the Oil Spill underscores the Icarus paradox, which holds that the very capabilities that give an organization its source of competitive advantage can become constraining with changes to the external context. Teece (2009) emphasised that dynamic capabilities revolve around three generic types namely: Sensing (ability to scan, search and explore the external