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Ethical Leadership - Exxon, BP, and Hydraulic Fracturing Case Study

13 Pages4793 Words729 Views
   

Australian Catholic University

   

Ethical Leadership in Organisations (MGMT638)

   

Added on  2020-03-01

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This report mainly seeks to evaluate how ethical leadership is vital in risk management, especially in the gas and oil industry. The particular case study used in drafting this report contains evaluated discussions about Exxon oil spill, the BP explosion case and the fracking activities. This study also discuss ethical leadership plays a critical role in ensuring proper risk management. In this type of leadership, this study discuss the leaders to respect the values, beliefs, and interests of all the stakeholders of the organizations that they can lead. 

Ethical Leadership - Exxon, BP, and Hydraulic Fracturing Case Study

   

Australian Catholic University

   

Ethical Leadership in Organisations (MGMT638)

   Added on 2020-03-01

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ETHICAL LEADERSHIP: EXXON, BP, AND HYDRAULIC FRACTURING CASE STUDY1Ethical Leadership: Exxon, BP, and Hydraulic Fracturing Case Study Student nameInstitutionProfessor
Ethical Leadership - Exxon, BP, and Hydraulic Fracturing Case Study_1
ETHICAL LEADERSHIP: EXXON, BP, AND HYDRAULIC FRACTURING CASE STUDY2Executive summary.This report mainly seeks to evaluate how ethical leadership is vital in risk management,especially in the gas and oil industry. The gas and oil industry is faced with several risks whichencompass leaks, spills and explosions, financial and political risks, and risk of loss of reputationamong their stakeholders. The organizations may lose status when accidents occur. Mostaccidents in the gas and oil companies happen due to unethical practices which the companiesare involved in. Some companies concentrate on making profits more than the safety of theiroperations. The particular case study used in drafting this report contains evaluated discussionsabout Exxon oil spill, the BP explosion case and the fracking activities.Management of ethical risks in oil and gas industry helps in reducing accidents byensuring the provision of incentives used in changing the safety culture, certification and trainingof employees so that they become more conversant with the nature of their jobs and the risksinvolved and exploring proper change management so as to adapt to the operationalenvironment.Ethical leadership plays a critical role in ensuring proper risk management. In this type ofleadership, the leaders must respect the values, beliefs, and interests of all the stakeholders of theorganizations that they lead. Ethical leadership ensures that a culture of transparency andresponsibility is created, environmental risks are adequately managed and that proper safety andquality management procedures are put in place. All these aspects have been discussed in thisreport. The report has been summarized by an overall conclusion that has explored an overalloverview of ethical leadership in the oil and gas industry.
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ETHICAL LEADERSHIP: EXXON, BP, AND HYDRAULIC FRACTURING CASE STUDY3Table of ContentsExecutive summary...................................................................................................................................2Introduction...............................................................................................................................................4How ethical risk management in gas and oil industries relate to the reduction of accidents...............4Management of change.........................................................................................................................4Proper preparedness for disaster.........................................................................................................5Certification and training.....................................................................................................................5Providing incentives to change the safety culture...............................................................................6Proper corporate standards and practices...........................................................................................6Comparison of the risks faced by Exxon, BP, and the Fracking industry as they strive to provide a constant energy supply..............................................................................................................................7They all face the risk of leaks, explosions, and spills...........................................................................7They all face the risk of loss of reputation...........................................................................................8They all face political risks....................................................................................................................8They all face financial risks...................................................................................................................9How ethical Leadership helps the oil and gas industry manage risk.....................................................9Creates a culture of transparency and responsibility.........................................................................9Environmental risk management.......................................................................................................10Safety and quality management.........................................................................................................10Ensures proper risk preparedness.....................................................................................................11Conclusions..............................................................................................................................................11References................................................................................................................................................12
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ETHICAL LEADERSHIP: EXXON, BP, AND HYDRAULIC FRACTURING CASE STUDY4IntroductionOil and gas are the world's most valuable commodities. However, the oil and gas industryis faced with various environmental risks. These may range from oil spills, leaks, explosions andemission of dangerous gases into the atmosphere which may encourage global warming,(Burnham et al., 2011, p. 619). Serious accidents that have faced gas and oil industries in the pasthave resulted from unethical practices. These accidents include the Exxon oil spill whichhappened in 1989 resulting in the contamination of the ocean, incapacitation of fishing activitiesand liabilities to the company in terms of cleanups and compensation, BP explosion incident in2010 which resulted in the death of eleven workers and the methane gas emissions which resultfrom fracking activities, (Gill, et al., 2012, p. 3). There is, therefore, need for oil and gascompanies to embrace ethical leadership and ensure ethical risk management activities are put inplace to reduce the accidents.How ethical risk management in gas and oil industries relate to the reduction of accidents.According to Thiel et al. (2012, p. 49), ethics refers to the right behavior expected of aperson, corporate body or group of individuals. It defines what is right or wrong in anorganization. When a company is faced with unethical practices, then it may be exposed toseveral ethical risks. Moral risk refers to unexpected negative consequences that result fromimmoral activities, (Ford & Richardson, 2013, p. p. 20). Ethical risk management deals withseveral ways in which ethical risks can be identified, mitigated and transformed, (Valentine etal., 2011, p. 358). Ethical risk management in the oil and gas companies relates to the reductionof accidents in the following ways:Management of change.Change management enables the company to adjust to risk. When a corporation hastransparent change management procedures, it will be able to identify the dangerous areas of thebusiness and adapt to them before any accidents occur, (Craft, 2013, p. 228). Changemanagement closely relates to the strategy formulation. Companies should formulate strategiesthat allow for change. Whenever there is a change in operations, proper policies should be put inplace to support such changes, (Hartman et al., 2014, p. 108). Changes can be exerted onemployees, technology or the management structure of the organization as a whole.
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