Risk Management Essay Example | Topics and Well Written Essays - 4000 words

Risk Management - Essay Example Previously, the safety culture at BP had presented a cause for concern with the Texas City Refinery explosion and other events presenting an adverse image. Toney Hayward, the former CEO of BP, had tried to enhance safety at BP when he took office at a time when BP faced three criminal investigations. However, it would appear that the managerial decision-making processes at BP remained flawed as managers continued to take risks in efforts directed towards trying to manage costs and delays while neglecting safety. Although it is likely that a blowout preventer with a flawed design contributed to the BP Deepwater Horizon disaster, the managerial emphasis on costs and delays caused BP subcontractors to become negligent. BP managers refused Halliburton recommendations to use twenty-one centralisers and proceeded to cement the well using only six centralisers. Halliburton used cement that did not pass its own laboratory tests to cement the well and this contributed to the flow of hydrocarb ons into the well. Transocean crew did not take adequate notice of the kick in the well that pointed to a loss of well control and proceeded to release gases from the well on to the rig through the mud gas separator instead of diverting the gas away from the rig. In addition, inadequate maintenance of the blowout preventer was to contribute to events. Because bonuses presented to BP project managers depended on completing projects close to budgeted costs and schedule, the wrong emphasis had persisted. It is likely that independent verification of managerial decision-making emphasising safety from a command that is distinct from the project management command at BP under a Chief Safety Officer reporting directly to the CEO at BP will help present the correct emphasis. BP did have a safety director at the time of the BP Deepwater Horizon disaster, but it will appear that this safety director lacked powers, a separate chain of command and a capacity for working effectively to give effe ct to his mandate. The new CEO at BP has promised to create a safety division at BP with sweeping powers. BP project managers should now receive bonuses that emphasise correctness of their managerial decision-making for a project instead of receiving rewards for trying to complete a job within budget and schedule while taking risks with safety. In addition, it will make sense for BP to try to contribute towards helping to improve the design and reliability of superior technology for offshore operations, including subsea blowout preventers. Contents Introduction 1 What Went Wrong? An Analysis of BP’s Approach to Risk Management that Influenced the BP Deepwater Horizon Disaster 3 A Reasoned Discussion about How BP Should Progress in the Future with Regard to Risk Management 15 Conclusion 19 Bibliography / References 22 List of Figures Figure 1: Typical Subsea Blowout Preventer Stack 7 Figure 2: Deepwater Drilling with Subsea Blowout Preventer 8 (This page intentionally left bla nk) Introduction The word â€Å"risk† refers to the possibility of loss, injury or harm, and it is unfortunately true that it is not possible to assign absolute certainty to the occurrence of any one event because there will always be some level of uncertainty associated with the outcome of events (Bonham, 2008, Pp. 183 –