Executive Summary

This report is produced for the purpose of training staff in major risk areas. It draws on the

BP oil spill case in the Gulf of Mexico to identify areas of major risk and how these risks

were dealt with. In order to allow for more comprehensive analysis, attention is focused on

mainly three risk management issues faced by BP.

Ineffective management, regulatory failure and crisis containment failure were the three

risk management issues identified. In the case study we found BP’s management to be

ineffective as its promotion of a profit based organizational culture not only leads poor

decisions based on cost cutting criteria to be taken, but also prevents organizational learning.

BP management further failed to co-ordinate and communicate effectively, further exposing

the company to greater risks. All these problems associated will poor management of the

company demonstrate the importance an effective management system that promotes long

term sustainability instead of short term profits.

Nations and companies may often view government regulations as an additional check,

expecting regulation to take preventive or corrective actions where they fall short. In BP’s

oil spill case however government and company interdependence increased the complexity

of the situation which resulted in both failing to take corrective actions to reduce risks while

also failing to formulate an appropriate crisis plan. This illustrates the need for reduced

dependency and a more proactive approach to managing risks as opposed to a reactive

approach.

The final issue in focus is that of crisis containment. Through the analysis of BP’s oil spill

case study we see how lack of planning and thus ineffective communication strategies aimed

at protecting the company’s image further tarnish it. We