Analysis Of Bps Operational Risk Management Management Essay

Analysis Of Bps Operational Risk Management Management Essay British Petroleum PLC (BP), one of the worlds largest oil and gas companies, is headquartered in London, United Kingdom. It provides its customers with fuel for transportation, energy for heat and light, retail services for gasoline and petrochemical products for everyday items (About BP, 2011). The Companys operations primarily include the exploration and production of gas and crude oil, as well as the marketing and trading of natural gas, power, and natural gas liquids. At present, BP employs over 80,000 people and operates in more than 100 countries. It produces approximately 3.8 million barrels of oil per day and has 22,400 service stations worldwide (BP, PLc Swot Analysis, 2010). In 2010, the Company incurred incredible losses from the Deepwater Horizon Oil Spill Incident in the Gulf of Mexico due to lack of oversight and control of operational risks (McDonald, BP Oil Disaster Breaks Records, Puts Spotlight On Risk Management Failure, 2010). The Incident has caused disastrous biological environment, 13 peoples deaths and 17 others injuries (McDonald, BP Oil Disaster Breaks Records, Puts Spotlight On Risk Management Failure, 2010). Immediately after the Incident, the Companys risk management practices were investigated. The scrutiny ultimately led to the dismissal of its CEO, Tony Hayward (McDonald, BP Oil Disaster Breaks Records, Puts Spotlight On Risk Management Failure, 2010). In this report, we will explore how BP unsuccessfully managed its operational risks prior to the Incident, and the strategic steps that have been taken in order to mitigate the losses and prevent a similar crisis from happening again. Reasons that Led to BPs Exposure to the Incident According to McDonald, the Incident was mainly attributable to the poor operational risk management of the corporate executives who placed a low priority on the safety issues (McDonald, BP Oil Disaster Breaks Records, Puts Spotlight On Risk Management Failure, 2010). McDonald also mentioned that Hayward appeared to know nothing about the front-line operations in the Company (McDonald, BP Oil Disaster Breaks Records, Puts Spotlight On Risk Management Failure, 2010). Furthermore, BPs history of oil spill incidents demonstrated its poor operational risk management in the past years. These previous tragic incidents included the U.S. refinery explosion in 2005 and the Prudhoe Bay oil spills in 2006 and 2007 (Fineberg, 2007). Since the Company continued to ignore the safety issues and risk management even after these incidents, a more serious Incident in the Gulf of Mexico has occurred. Finally, BP failed to inspect the oil rig on a monthly basis as prescribed in the government regulation (Strickler, 2010). A government inspection report revealed that BPs Deepwater Horizon oil rig had missed 16 inspections in total since January 2005(Strickler, 2010). Financial Losses and Reputational Damage following the Incident Following the Incident, BP was required to reduce planned capital expenditures and increase asset disposals in order to provide additional liquidity (BP p.l.c, 2010). Moreover, a total pre-tax charge of $40.9 billion was recognized during 2010 (BP p.l.c, 2010). However, BP is still uncertain about the total amount that will ultimately be paid. The Company is currently being charged in a number of lawsuits that could lead to substantial costs (BP p.l.c, 2010). These costs may include the amount of pending and future claims, the potential expenses of implementing remedies sought in the various proceedings, and the amount of fines ultimately levied on BP (BP p.l.c, 2010). As seen in Appendix A, Moodys Investors Services and Standard Poors have downgraded BPs credit ratings immediately after the Incident. Although there have been slight improvements ever since, the current credit ratings are still lower than they were immediately before the Incident. The lower credit ratings prompted a large number of investors, who were holding BPs US Industrial Revenue/Municipal bonds, to exercise their option to tender the bonds for repayment (BP p.l.c, 2010). This caused BP a total repayment of $2.5 billion (BP p.l.c, 2010). The lower credit ratings could also limit the Companys access to new financing. In addition, the Incident has led to a significant drop in BPs share price. On June 25 of 2010, the share price went down to the lowest point of $27. 02, as compared to $60.48 on April 23 of 2010, the day of the Incident (BP plc (ADR) (Public, NYSE:BP) ). Along with the financial losses, the Incident has damaged BPs reputation, which may have a long-term impact on the Companys ability to build business relationships with new counterparties and access new opportunities (BP p.l.c, 2010). Moreover, the current counterparties, concerned about the additional financial and business risks following this Incident, may require the Company to provide collateral or other forms of financial security for its obligations (BP p.l.c, 2010). Risk and Liquidity Management After the Incident, BP has taken preventative measures to mitigate future unexpected events related to poorly-managed operational risks (McDonald, All Road Lead to CEO, 2010). On September 29 of 2010, the new CEO, Bob Dudley, announced a plan to establish a new safety division with sweeping powers to oversee and monitor the Companys operations around the world (BP Creates New Safety and Risk Division, 2010). The new division has been given the authority to intervene in all aspects of BPs technical activities. The divisions experts will be embedded in BPs operating units, including exploration projects and refineries. These experts have the responsibility to ensure that all operations are carried out in compliance with government regulations and auditing standards (BP, 2010). In order to further reinforce this new practice, Dudley has requested the head of the safety division to report directly to him so that all information regarding the Companys current operational risk status can b e conveyed in a timely manner (McDonald, All Road Lead to CEO, 2010). BP has also reinforced its accountability of risk management by restructuring its exploration and production segment from a single business into three separate functions-exploration, development and production (BP, 2010). This makes it easier for BP to monitor each function separately. To increase available liquidity, BP cancelled the ordinary share dividends in the first three quarters of 2010, secured additional bank lines totaling $12 million and announced its intention to sell up to $30 billion of assets (BP p.l.c, 2010). Conclusion Prior to the Incident, BPs executives overlooked the necessity of operational risk management. This made the Company vulnerable to operational risks. Even after the two oil spills between 2005 and 2007, BP still did not take effective measures to improve its risk management practices. Fortunately, the problem has finally been recognized by Dudley, who has initiated constructive plans to enforce operational risk management across all divisions in the Company. Appendix Appendix A: A comparison of BPs Credit Ratings before and after the Incident Before Immediate After Current Moodys Investors Service Aa1 (stable outlook) A2 (negative watch) A2 (stable outlook) Standards Poors AA (stable outlook) A (negative watch) A (negative outlook) Source: BP p.l.c. (2010, December 31). Annual Report and Form 20-F 2010. Retrieved March 20, 2011, from BP Global: http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/downloads/pdf/BP_Annual_Report_and_Form_20F.pdf

Manifest Destiny Essay

Manifest Destiny is defined as â€Å"a belief that it was God’s will that Americans spread over the entire continent, and to control and populate the country as they see fit.† Many expansionists conceived God as having the power to sustain and guide human destiny. It was white man’s heavy burden to conquer and Christianize the heathen and savage land. While the positive side of Manifest Destiny was a surge of enthusiasm and energy from the white settlers for pushing West, the negative side was the belief that the white man had the right to destroy anything and anyone — namely Indians — who got in the way. Tracing the path of Manifest Destiny across the West would highlight mass destruction of tribal organizations, confinement of Indians to reservations, and full blown genocide. The dark side of Manifest Destiny revealed the white man’s belief that his settlement of the land and civilization of its native peoples was preordained. While the whites were occupying the land, they decimated the Indian population, causing many tribes to flee their relentless onward push, or try to compromise with treaties and agreements. One such tribe to fall victim to the white encroachment upon their territory was the Nez Perce of North Western Oregon. The Nez Perce agreed to an 1855 treaty that guaranteed the tribe most of their traditional homeland in the Wallowa Valley of northeast Oregon to try to accommodate the white people who were beginning to invade their lands. Unfortunately, gold was soon discovered upon the Nez Perce land and the settlers wanted a larger portion of that land. The resulting 1863 treaty was agreed to by some tribal chiefs, but not all. Those who refused to sign were given an ultimatum in 1877, and rather than risk war, the non-treaty Nez Perce chiefs–Joseph, Looking Glass, White Bird, Toohoolhoolzote, Bald Head–decided to move their people onto the smaller remaining section of the reserva tion, towards Fort Lapwai. Look more:  manifest destiny essay There were nearly 800 of the Nez Perce–men, women and children–and a herd of about 2,000 Appaloosa horses on the trek. On the way to Lapwai, things fell apart. A few young warriors were goaded into taking revenge on several whites who had killed tribal members in the past, and the U.S. Army retaliated by attacking the Nez Perce at White Bird Canyon, Idaho. Giving up the attempt to move to the reservation, the Nez Perce chiefs resolved to  flee to the east and seek out their Crow allies in Montana. When the Crow tribes showed them no friendship and tried to steal their horses, the Nez Perce set off for Canada. They almost made it, but the U.S. Army caught up with them and defeated them 45 miles shy of the border. Although the Nez Perce were one of the welcoming tribes that met Lewis and Clark, their kind efforts led to revenge, misunderstanding, deceit, greed and death. Another tribe which was victimized by the United States were the Cupeà ±os. The Cupeà ±os were a small tribe, one of the smallest Native American tribes in Southern California. It was unlikely that they ever numbered more than 1,000 at a time. They once occupied a territory approximately 10 square miles in diameter in a region of the San Luis Rey River in the valley of San Jose de Valle. Before 1810, the Cupans had very little contact with outsiders — Spanish or otherwise. They had lived on their land for countless generations, their land including the medicinal hot springs and the village called Cupa. Unfortunately for the Cupenos, the pioneers who trekked West through the southern route, took a trail which trespassed upon their territory. To add insult to injury, American officials in San Diego concluded that a reasonable source of revenue would be taxation upon the Indians of the back country. The Cupans were assessed a $600 tax that with great resentment was finally paid by the villagers. By the late 1800’s the hot sulfur springs found on the Cupa territories were becoming very popular and attracting visitors from Los Angeles and San Diego. The popularity of the destination and the growing California population began the events which ultimately led to the expulsion of the Cupans from their homeland. Four years after California became a state, a land survey commission was formed, and cattleman Juan Jose Warner claimed 47,500 acres of what is now Warner Springs. Warner Springs makes up the majority of the Cupan homeland. The property was later purchased by former California Governor John Downey in 1880. Downey then filed a lawsuit — later pursued by his heirs after  his death — claiming title to the land and demanding eviction of the Cupenos from the property. The Cupas argued before the courts that Mexican law, as well as the peace treaty that ended the war between Mexico and the United States, ensured Indian rights and precluded the hostile takeover of their land. They argued to no avail. The California courts agreed with Downey and in 1901 the United States Supreme Court affirmed the judgment ordering removal of the Indians. President Rutherford Hayes, prompted by the Supreme Court holding, declared the Indians â€Å"trespassers† and ordered the tribe relocated to Pala, California, just beyond the Palomar Mountains where a 10,000-acre reservation had been established. Pala was a Luiseno reservation then, not Cupa. This act marked the first time in U.S. history that two distinct Indian tribes were herded together in one reservation. This was a blemish upon a nation that prided itself on leading the world into the 20th Century and the cultural and political renaissance that accompanied such a transition.

Primary Physical And It Security Threats - 1731 Words

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Why School Nurses Must Required More Mental Health Training

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