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Governance, Risk Management, and Compliance: It Can't Happen to Us—Avoiding Corporate Disaster While Driving Success by Richard M. Steinberg

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BP

To better grasp what needs to go right in risk identification, assessment, and management, let's look at something that went terribly wrong at one major company: BP. In looking over these highlights, you might want to consider what likely would have been very different if the company had an effective risk management process founded on a culture based on integrity and ethical values with the desired tone at the top.

When the Deepwater Horizon offshore oil rig exploded on April 20, 2010, it killed 11 workers and wreaked economic ruin across the Gulf Coast states and environmental ruin along the coastal shoreline. For months, efforts failed to stop the continuing undersea oil spill. What went wrong? We're not inside BP, but media reports provide a good indication of what happened and what can be learned from this horrible disaster.

Context here is important. Until the Deepwater Horizon went down in flames, we might have forgotten other disasters that had befallen BP. Its Texas City, Texas, refinery exploded in 2005, killing 15 workers. Its pipeline on Alaska's North Slope ruptured in 2006, spilling 200,000 gallons of crude oil. Going back to 2003, a BP platform in the North Sea endured a violent release of pressured gas; the station avoided an explosion only by sheer luck, and BP later admitted to breaking safety laws by failing to guard against corrosion of the ruptured pipe.

Safety violations are numerous, including more than 700 at the Texas City refinery alone. Many relate ...

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