BP's Environmental Risks and Mitigation Strategies
Added on 2019-12-03
12 Pages3287 Words170 Views
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MANAGINGCORPORATE RISKAND CRIME
EXECUTIVE SUMMARYRisk and crime management is required in every organization in order to identify, assessand prioritize the effect of risk and fraud. Risk management is done with an aim of minimizing,monitoring and controlling the impact of unfortunate event. This report is mainly emphasized onthe risk management in BP which is a large international organization which operates theiractivity across the globe (Tummala and Schoenherr, 2011). This company has experienced manyincidents such as explosion of oil wells while drilling and extracting oil form oil wells. For thispurpose, BP has to create and maintain risk management in a proper and accurate manner.Company has divided or separated different types of risk under a particular heads and then thoserisk are managed by using risk management tools such as risk register in which all types of riskare entered and then their level of impact and frequency of occurring has been done so that theirrisk can be prevented or its level can be reduced. The risk is also identified and represented using the heat map in which key risks arementioned along with their extent and possibility of occurring. This will help the company to getthe knowledge of type of risk, its level of impact, the measures which can be taken in order toprevent or reduce the risk. Thus, it is inferred that BP has managed its risk in a proper or accuratemanner because it has taken a lesson from its past experience of various incident such as BP oillspill in Gulf of Mexico (Olsson, 2008).2
RISK MANAGEMENT IN BP Risk; every business leaders know it exists. However, many times companies does nottake a holistic approach to assess and manage their risk exposures. Due to which disruptionhappens, natural disasters, technology disasters, other man-made disasters happen. To avoid suchcircumstances, proper risk management should be done. Risk remains an important issue forevery business, but at BP it is fundamental to what they do (Elena, and Richard, 2013). BPoperate at the frontiers of the energy industry and in such environment where attitude to risk iskey. The location in which they work in and the technical and physical challenges BP take onand also the investments they make – these all demand a sharp focus on how it manages risk.Risk management system is designed in BP to be consistent and clear framework so as tomanage and report risks from the operation to the board. BP manages, monitor and reports aboutthe principle risks and uncertainties which can impact BP's ability in delivering the strategy ofmeeting the energy needs of world, if delivered successfully than long term shareholder valuecan be created. The management system of BP and their organizational structure, process,standard, code of conduct of employees togetherly form a system of controlling internally whichgoverns the conduct of business of BP and help in managing the associated risk (Rasid, Rahmanand Ismail, 2011).The risk management in BP is done by installing the risk management system so that riskand its impact can be managed properly and unfortunate incident can be avoided. Some of themare discussed as follows:Daily Risk Management: Identification of facility, assets and function is done bymanagement and staff and then risk is managed and promoted. The operatingmanagement system integrates the requirement of BP on health, safety, security,environment, operational reliability, etc. After that management present the report on adaily basis and thus day-to-day risk management is done.Operational Risk Management: The operational business of BP are responsible foridentifying and managing the operating risk. They bring people of right skills andcompetencies together so that they can address and manage the operating risk. The safetyand operational risk team work along with operating business so that they can examinehow to assess, prioritize and manage risk. They also intervene whenever required in order3
to bring corrective actions. Auditing team visits various sites to check the management ofrisk by the operational team (Schubert, 2006).Board Risk Management: BP identify certain risk as a high priority risk to have anoversight by the board. This type of management include risk associated with Gulf ofMexico oil spill, geopolitical risk, security, ethical misconduct, legal and regulatory non-compliance, major project delivery and various incidents associated with the welldrilling, operating facilities and transportation of hydrocarbons.Managing safety is a top priority of BP because it is a oil company safety is must in orderto reduce the risk of any incident. BP strive to create and maintain safe working environment. BPsets the 3 line of defense for managing risk and maintaining safety which are as follows:First: Sites of BP work continuously to verify the conformance along with requirementsto have safe, reliable and compliant operations.Second: Safety and operational risk team provides BP with tools, guidance and support tohelp employees of BP so that they can conform BP's operating management system.Third: Auditing is done in a group and they provide an independent check of theeffectiveness of a sample of activities which intend to manage risk at BP.RISK REGISTER ENTRIES FOR KEY RISK FACING BPRisk register also known as risk log is a risk management tool which is commonly usedfor managing risk. It usually acts as a central repository that is central location where the dataabout all the identified risk of the organization are sorted, standardized and stored for therelevance to the appropriate level of management. Risk register contains a risk category so as tomake the group of similar risk, a brief description about the risk so that its discussion can bemade easy, possible impacts can be rated on scale, probability of of risk occurrence is rated onscale and many more. The key function of risk register is to provide significant informationabout the key risks which organization is facing to the management, board and other keystakeholders (Kutsch, 2008). It also gives the clear view about the present status of each riskwhich can occur at any point of time. There are various importance of a risk register , some ofthem are discussed as follows:It helps in understanding the nature of risk the organization faces.Organization can become aware about the extent of those risk.4
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