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How Did BP’s Risk Management Lead to Failure?

Richard M. Steinberg | July 20, 2010

We all know the damage caused so far by the explosion of BP’s Deepwater Horizon offshore oil rig in April: 11 workers killed, economic ruin across the Gulf Coast states, environmental ruin along the Gulf Coast itself. And efforts to stop the continuing undersea oil spill keep falling far short of the solution that’s desperately needed.

What went wrong? News reports have offered some insight, but early reports often contain information later proven inaccurate. Since we’re not on the inside of BP, we don’t have the benefit of accurate and complete information as to its inner workings. We can, however, use the media reports to get a sense of what happened, and learn a good deal about risk management from this horrible disaster.

Until the Deepwater Horizon went down in flames, we might have forgotten other disasters that have befallen BP. Its Texas City, Texas, refinery exploded in 2005, killing 15 workers. Its pipeline on Alaska’s...

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