W8A1

Running Head: Dynamically Managing Residual Risk 1

Dynamically Managing Residual Risk

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Question 1

An organizations ability to handle risks is measured by the Critical Success Risk Factors (CSF). The CSF highlights essential factors an organization should mandatorily possess to mitigate various risks. In this case, study, The Critical Success Risk Factors play a significant role. To begin with, the British Petroleum facility in Texas experienced an explosion in 2005. This should have led to alteration in the manner in which they operated. The initial step in the CSF is organization to provide support to their pool of employees. (Zafar, 2010). 

In the British Petroleum case in 2005, the explosion did not provide a suitable environment for their employees. The organization paid more focus into making profits at the expense of employee safety. Their stock price decreased by $7 dollars after the explosion. Top management struggled putting a Band-Aid to the problem rather than finding a suitable solution to it. Employee were not well equipped on how to properly handle and respond to explosions. Likewise, after the occurrence of the incident, the organization also did not train the employees since they were ignorant to realize that the company had a problem. (Hunter, & Richard, 2008). 

Majority of organizations often conduct training to their employees based on lesson learnt from unfateful event in a bid to prevent further occurrence of the same. Since they feared that their stock price could experience another further drop, they dint pay attention to the company problem. After an investigation chaired by the BP with assistance of the former Secretary of state, John Baker, an independent investigation was conducted by the US Hazard Investigation Board and the US Chemical Safety and it was found that BP had been ignorant in their operations. The investigation between BP and Baker made it appear like the organizations operations were on par with the federal safety implications. However, this was proved otherwise by the independent investigations.

Through the research conducted, it was discovered that the safety deficiencies were apparent to al levels s of the organization. It was clear that British Petroleum was more concerned with profit maximization motive as opposed to employee safety. No evidence of formal or on-job-training was provided. Focus was more on productivity. According to Critical Success Factors, it recommended to have competent personnel in all organizations level to help in risks mitigations.

If training were conducted, the operation of the British Petroleum could have been efficient that could have led them to focus more on employee safety as opposed to profits. It was apparent their the focus for profits cost them more since stock value decreased as a result of the 2005 mishap as well as Deep Water Horizon (DWH) explosion and oil spills. With regard to supporting infrastructure, they had expanded their branches to many parts of the world.

Since some of their locations were not that stable, they were used to taking a number of risks. It began with oil exploration in the Middle East. The region was rampant with internal conflicts during that time which they knew from the beginning. They accepted any risk that would arise therein seems they had a strong belief that the only way to be successful in business is only through taking of risks. This idea from the start created an environment for oil exploration and its production.

Their main aim was to engage in whatever it takes to increase barrels they daily produced. Although the main aim of the British Petroleum was to produce oil, views changed as soon as John Browned was hired as a chief executive officer who ended up changing the organization culture of BP. John Browned did not only shift focus for creative more of alternative energy but also he brought into focus employee safety.

Question 2

The advantage of British Petroleum (BP) aggressiveness created an opportunity of control over their operations. They were willing to venture into parts of the world that seemed unfavourable for business. British Petroleum (BP) explored over 25 countries, which produced more than 4 million barrels daily. They had the willingness to enter into risky ventures in a bid to grow their organization. In as much as they risks they took had brought certain negative impacts, they success is owed to risks they per took. BP was willing to adopt change on the organization culture of the oil industry through advocating for change.

John Browned thought of BP being socially responsible. They became the first oil organization to announce publicly that they are to going to create more alternative energy as well as investing in environment protection. John Browned was interested into improving the organizations mage since they were under scrutiny. Texas refinery, which was acquired by British Petroleum in 1999, became the third largest refinery in United States. The organizations had prior occurrences, which led to the 2005 explosion, which could have given rise to certain issues.

Question 3

The first action that British Petroleum should execute is to engaging into how to improve their infrastructure. According to the Finical Times, a number of defects of BP were pointed out that could have been addressed promptly. BP could have created better working environments for their employees since it encompasses the risks. BP needs to shift focus from business expansion in various parts of the world to improving the pre-existing facilities they host. The implication of this is that workers will have a sense of pride since the organization cares about their safety.

Secondly, the British Petroleum should organize for training and safety talks. For an instance, if an employee dies in the event of a mishap, that incident should be thoroughly reviewed and used as a training tool. This can prevent the occurrence of similar risks in the future. Military applies this technique in their various branches. From past mishaps, they conduct training to come up with best practices. If such occurrence happen again, they will have safety stand-down from the operation to aid in reassessment of the operations. The main objective is to determine the cause of the incident and address it effectively. In the case of the British Petroleum, they have failed to implement policies, which need facilities to help in investigation of mishaps and to conduct which will work towards preventing them. (Hunter, 2008).

Last but least, the British Petroleum need to have in place continuity with the rest of their facilities within America. The BP case study suggests, “Each refinery has their own separate and distinct process safety culture”. It goes further to state that some refineries are good in promoting employee safety while other do not meet the standard. In my opinion, BP should look for an independent organization that will develop safety audit as well as conduct safety audits of their facilities. Both safety stand-own and training should be carried out at each facility to reaffirm the British Petroleum stance on safety wit their pool of employees.

Question 4

The first risk category that is evidenced with BP is operations management. It was clear that the management had failed to take correct measures to prevent future occurrence of the same events. Level two category could have consisted of facility supervisors and corporate supervisors. The next category would be internal factors. It is no doubt that the working environment was very poor. BP was under a lot of pressure to produce oil. Due to this, they ended up making irrational decisions since they did no welcome the idea of loosing their jobs.

British Petroleum made it clear that their main goal was the focus on oil expansion and production. They created a culture, which made it look like some degree of risks were allowed to have some jobs done. Environment is the last level one category present. Since conditions were not ideal, British Petroleum through of expanding their exploration in some parts of the world which are dangerous. Surprisingly they lacked resources to support the crew. Similarly, they did not comply with safety regulation in the locations since they did not regulate the exploration as done by US.

References

BP Case Study: After the Deepwater Oil Spill. (2012). Place of publication not identified: Datamonitor Plc.

Hunter, T., & Richard Ivey School of Business. (2008). British Petroleum (PLC) and John Browne: A culture of risk beyond petrol (A). London, Ont.: Richard Ivey School of Business, University of Western Ontario.

Zafar, H. (2010). Critical Success Factors for an Effective Security Risk ManagementProgram in an Organization: An Exploratory Case Study.