On Friday, BP agreed to pay a $4 billion penalty to settle criminal charges related to the Deepwater Horizon oil spill in the Gulf of Mexico in 2010, which killed 11 workers and sent millions of barrels of oil into the Gulf. An article in the Australian Finance Review argues that the fine should spur companies to reassess their companies’ risk management procedures and culture.
Ben Balot, chief risk officer at Origin Energy in Australia, notes that Transocean, which operated the oil rig for BP, was very focused on managing such risks as injuries to workers. In fact, senior managers were present on the rig the day of the explosion to celebrate zero lost time over seven years. But they missed the risk that led to the disaster.
Balot says that just as the financial crisis increased executives’ financial literacy, the BP disaster should boost awareness of operational risks, such as damage to the environment and personal injuries.
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