The BP Oil Leak Accident and What We Can Learn From It http://bit.ly/yXEfuC

Article by Abel Mens

No sooner than the Gulf of Mexico oil spill took place, British Petroleum (BP) took initiatives to follow a "Top Kill" policy and seal the leak on the pipeline by putting down quite a lot of concrete or cement over the leakages. What I did not appreciate was that how did they manage to let it happen in the first place? It was quite heart wrenching to know that more than five workers had been dead already. I think the best way to stop these saddening events from taking place is by being pro-active rather than re-active.

One might question how is it possible for corporations like BP to oversee these unforeseeable disasters and respond. The fact is, after the 1990's, new fields in management have cropped up that places Contingency Plans, Disaster Management Teams and Worst-case Scenario analysis at the focal point. Even in the field of Finance, now we have FRM (Financial Risk Management). What I have in my mind here is that most probably BP had a Risk Management Team beforehand that calculated the probability of this even happening. If the Risk Managers of BP didn't even consider the probability of a leakage occurring in the pipeline (it's quite a possibility, wouldn't you agree?!), then I guess it is time for us to be upset about the management expertise of BP's managers. I would say it would not hurt for the court to have a look at BP's management team and check the documents to find out how did they plan to pay for the compensations, in case the anomalous event took place.

Another thing that has caught my eyes is how BP is now trying to lengthen the whole process of paying compensations and refusing to pay out of its Free Cash Flow. Instead, BP is thinking of issuing new Corporate Bonds or to rely on banks to make a funding of $ 5 Billion to cover up the damage costs.

I guess, without the intervention and support from international non-governmental organizations that work to protect marine life as well as the U.S government, BP would find out excuses to haggle with the compensation amount per head. Notwithstanding the amount of tirade that newspapers or online posters direct at BP, we must keep in mind that BP is a business organization nevertheless. Moreover, unless BP's vision has nothing about Corporate Social Responsibility (CSR) in it, they would not be much motivated to spend money to sooth angry and sad general people.