BP Deepwater Horizon Oil Spill Crisis Risk Management - Coursework Example

BP Deepwater Horizon Oil Spill Crisis Risk Management of the of the Introduction An outbreak of the deep water horizon oil rig located in the Gulf of Mexico led to the largest disaster of oil spill in history of the USA which resulted in the financial losses of British petroleum (Osofsky, 2011). The incident has resulted in an explosion that in turn led to the death of around eleven people. There was another incident that took place in the economy after the explosion which dealt with the leakage in the oil wells and around 780 gallons of crude oil leaked into the sea (Levy and Gopalakrishnan, 2010). To deal with such a situation, the company planned to use various tactics that would reduce the impact of the oil spill on the economy as a whole. This resulted in the loss of shares of the British petroleum industry and it fell to its lowest level in the London Stock Exchange (Levy and Gopalakrishnan, 2010). Further, the British petroleum faced challenges for the Boycott of its products from the market. Hence, the aim for conducting this research would be to analyze the impact of oil spill on British petroleum industry and the strategies that were taken to overcome the situation. The paper would offer the researcher a scope to carry out an overall evaluation of the global issue as well as to understand the risk management measures undertaken by the firm. Impact of the Oil Crisis and the measures taken by the company to control it The largest disaster that occurred in the US history led to the fall in reputation of the British Petroleum. As the spill progressed, the company was awarded the lowest grade among all the other multinationals within the economy (Park, Seager & Rao, 2011). It was studied by the researcher that deepwater horizon oil spill is expected to cost around $22.7 billion over the period of three years (Park, Seager & Rao, 2011). The spill had a major impact on the environment and is affecting the economies of the region. This has in turn affected the tourism industry of the region. The widespread oil spill had the economic impacts as there was a shortage in the availability of the crude oil within the economy (Anastas, Sonich-Mullin & Fried, 2010). There was steep decline in export of crude oil in case of the oil producing nations. Further after the major oil spill incident British Petroleum was considered as one of the worst companies that are carrying out its business in USA because of the huge impacts it had on the global economy. British Petroleum was referred to as one of the most polluting company in 1991 by the Environmental Protection Agency based on its data indicating the level of pollutants it releases in the atmosphere (Sylves & Comfort, 2012). A researcher has studied that the company was known for its accidents in USA since there were around 3565 accidents that took place in its chemical plants and refineries between the period of 1990 and 2004 (Lubchenco, 2012). Further the company’s operations have a worst safety records among any of the oil operating companies in USA. The company has gained reputation in spending money for lobbying compared to other oil and gas industries. The studies on the impact of the accident that took place indicated that British Petroleum industry was never concerned about the safety measures that are to be taken in order to run a business. The disaster that took place has indicated that the company had no prevention system and also neglected the security measures. The deep water oil leakage led to a fall in supply of crude oil as well as led to a decline in trade opportunities among the oil producing and the oil exporting nations (Carriger & Barron, 2011). Thus it led to a fall in revenue of the oil exporting countries resulting in financial issues for the oil producing nations. The impact of the accident was not only on the global economy but also on the company’s reputation in the global market. Further investigations on the deepwater oil spill revealed that The Company has no plan to meet the unforeseen situations and British Petroleum was far behind planning, testing and maintenance (Peterson, 2012). It is indicated by a researcher that the company adopted a series of short-cuts to save money which in turn increased the possibility of the accident to take place. It is highly expected that the economic, environmental and public health impacts of the oil spill crisis would continue for decades along with the pollution caused by state’s petrochemical plants. However the BP CSR history has a negative side as it had gained its reputation in creating disasters and has neglected to consider any safety measures for a long period of time (Eckle, Burgherr & Michaux, 2012). The deepwater horizon crisis was considered as a unique BP accident that took place in the history of US. The company even had to face legal issues related to the victim’s family who were killed in the accident. Although before the crisis BP was considered as a responsible company for carrying out pollution free measure but after the crisis the company has been considered as the worst company in terms of prevention and handling of environmental risks. Business Continuity and Risk Management After the accident British Petroleum has mobilized the resources and has also put in significant effort to mitigate the risk of the accident to take place again in the next few years. During the next five months after the oil spill incident took place the engineers of BP took necessary steps to control the oil leakage but all the attempts failed (Breeze, 2012).They used various techniques such as they closed the blow out preventer valves and they also planned to cover the well with containment box. There were conflicts among the BP engineers and the managers as the engineers tried to stop the leakages the managers fought for gaining back the company’s reputation and also in order to change the public perception that the company is efficient enough to handle the crisis (Park, Seager & Rao, 2011). The managers of the company initially failed to handle the situation. The company was slow enough to respond to the problem initially and it took around four days for the company to realize that there was a leakage in the wells. It was studied by the researcher that the company was slow enough to apologize to the victims’ families who were affected by the accident. The company initially did not consider the huge impact of the oil crisis. However the company used its website to inform people regarding the clean-up strategies taken by the company in order to compensate the victims affected by the disaster. In order to regain the reputation the company launched a vast public relation campaign. BP also used the social media advertising in order to purchase a number of the search terms to help the users search about Gulf Oil Spill that took place in US (Breeze, 2012). The researcher has indicated many crisis management models to assess the disaster caused by the British petroleum. One of the models that were used by the company to handle the crisis is that of the three phase situation. According to the researcher a model of crisis management deals with grouping of strategies into several categories and these strategies are placed on a defensive to accommodative continuum (Breeze, 2012). The crisis management process is considered to be a long-term process. The three stage model comprises of three phases that is the first stage is before the crisis and then the disaster phase focuses on addressing and preventing the threats (Venkatasubramanian, 2011). The final stage comprises of the situation after the disaster that also includes the impact of the crisis. The pre-crisis phase deals with the initiatives taken by the company to avoid the occurrence of the disaster. The second stage deals with the actual phase when the crisis takes place (Lin-Hi & Blumberg, 2011). The post crisis phase refers to the follow up event after the crisis. Thus the companies are expected to deal with the crisis situation following these various stages. Conclusion The paper deals with the deepwater oil crisis that took place in US in the year 2010 that led to a fall in availability of the crude oil for the next few years. British Petroleum was responsible for the crisis that took place in the economy leading to the economic loss to the crude oil exporting countries and in turn affected the trade within them. The British Petroleum industry had gained a reputation in the crude oil producing industry but after the crisis the company lost its reputation in the international markets because it failed to take the necessary steps to avoid the accident. It was studied by the researcher that the company did not respond to the accident and it took a long time to plug the leakage from the oil wells. However there were conflicts between the engineers and the managers in order to fix the impact of the crisis and regain the reputation of the company in the international market. The researcher has suggested a three stage model to deal with crisis management that is it deals with the pre-crisis phase, during the crisis and post-crisis phase. Despite the three stage model followed by the company, BP managers did not succeed in taking necessary steps to handle the incident of oil crisis. References Anastas, P. T., Sonich-Mullin, C. & Fried, B. (2010). Designing science in a crisis: The Deepwater Horizon oil spill. Environmental science & technology, 44(24), 9250-9251. Breeze, R. (2012). Legitimation in corporate discourse: Oil corporations after Deepwater Horizon. Discourse & Society, 23(1), 3-18. Carriger, J. F. & Barron, M. G. (2011). Minimizing risks from spilled oil to ecosystem services using influence diagrams: The Deepwater Horizon spill response. Environmental science & technology, 45(18), 7631-7639. Eckle, P., Burgherr, P. & Michaux, E. (2012). Risk of large oil spills: a statistical analysis in the aftermath of deepwater horizon. Environmental science & technology, 46(23), 13002-13008. Levy, J. K. & Gopalakrishnan, C. (2010). 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