Executive Summary Business risk management has been a widely crucial tool for firms to include in their operations and its importance cannot be overlooked. In the case of British Petroleum (BP) Gulf of Mexico Oil Spill in 2010, there was negligence and lack in the contingency plan and response of the company to the risks that arose. It became evident in this analysis that BP’s manner of handling the incident had a massive financial implication that ensued negative public perception and company reputation and value. The result of the analysis showed that BP could have had a better grip of the incident if they responded it with both a crisis communication plan and transparency. Their seeming indifference and unpreparedness reflected a
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In choosing the risk management issues discussed, the criteria that were used are level of risk, timeframe of the risk, possibility of multiple risks and the nature of the consequences of the risk. First, the risk management issues chosen for this report are on the level of severe risk, wherein management needs to provide a detailed contingency plan and immediately respond to the crisis. Next, in parallel to the severity of risk, the timeframe is an important criterion for the consistency of the analysis. The timeframe of the risks chosen are those that fall under the immediate stage of the crisis, which is considered to be the most critical as this can make or break the company’s reputation both in the short-term and long-term. Third criterion is multiplicity of risks, which in the case of BP is very applicable as one response to a certain risk leads to another risk that must be handled responsibly. Finally, the natures of the consequences were varied but for this report, operational, environmental and societal are mainly considered.
The scope of this report is about the analysis of risk management issues faced by BP and how BP responded to these risks. The report firstly provides facts surrounding the incident. This is followed by the analysis of risks present in the case and examples of concrete situations in the incident that support the risks. Lastly is the analysis of the response of BP and how this response could have been improved for BP to have a