So BP decided to focus on cost management. It was a decision that was aligned with the Board, the investors, the portfolio managers and the Banks. If we focus on costs, we can become profitable again.
Now the one thing that the executive team did not calculate was the potential risk of litigation in the event of a spill. Now think about it. The management team knowingly approved a financial ROI for the Gulf development that was known to be below industry best practices. Consensus was there should not have been a spill.
But the job of a risk manager is to say “What if the worst happens?”
and the worst did….and it added $43 Billion to the cost of the project.
and that does not include the irreparable damage done to the BP brand which resulted in years of disgruntled investors, consumers, pension funds and people.
Remember to add the worst case scenario to your financial analysis, you could be saving the world or BP could have saved the Gulf.
Benchmark your financial risk management so you can save the world: