The BP oil spill disaster exposed serious shortcomings in both technology and regulation, but the biggest culprit is a catastrophic failure of enterprise risk management.Most Americans presume that a multi-billion dollar energy firm of BP’s stature has the resources, technology, and skills to recover oil in a manner that is both profitable and safe for society. However, the extent of the ongoing catastrophe defies this presumption. According to Friedman:
It's hard to imagine a scenario any worse than this. An offshore oil rig explodes, killing 11 workers. The rig collapses. Oil keeps gushing from a deep-sea well, threatening the Gulf Coast, Florida Keys and perhaps even the Eastern Seaboard.Of course, even multi-billion dollar global corporations can make mistakes, and so society takes great comfort in knowing that the Federal government is diligently regulating and inspecting high-risk industries in order to protect its citizens from the deleterious effects of ecological devastation. Once again, the public apparently presumes too much.
The BP oil spill is not only a stain upon enterprise risk management as an occupation, but upon the entire US regulatory establishment as well. Let’s face it, enterprise risk management in America is a farce.
Source: Friedman, S (2010, May 31), BP Oil Spill a Stain on Risk Management, National Underwriter Property & Casualty.