There is an old phrase which goes "There but for the Grace of God go I." And when we look at what has happened with this environmental disaster on the shoulders of BP, this phrase came to mind.
There has been a lot of talk about the cost-cutting measures that BP underwent and how they had a risk profile of the drilling which identified that there was a potential of a spill (although I'm sure that risk profile never calculated anything quite of this magnitude). Yet this is what many companies do, on a regular basis.
I'm not excusing BP, as I wouldn't excuse any other firm that put lives at risk, however minutely, in the pursuit of a few more dollars. But let's be real...it happens all the time. Do you really think that every little screw that goes into holding an airplane together is the best money can buy? It will certainly meet standards but why get the Cadillac when the Volkswagen will do?
Procurement organizations throughout the world are being asked to find every nickel and dime and sometimes this means compromising quality and taking risk. Why have a relief oil well standing by, at a huge cost, when the risk of ever having to use it is minimal? I'm sure at this point BP wishes they had spent the few million more, as opposed to the billions they now need to fork over.
So all of us need to ask how much risk is acceptable. There is no magic bullet on this one...but I do believe that there is a lot of scrambling around the world in corporations today asking that question. I think often the risk assessments fall short...they deal only with the percentage of the risk...and don't go to the worst case scenario and analyze in great detail the potential downsides Why? Because of course, when does that ever happen?
Ask BP...it can happen and does....so before making risk pronouncements and cost cutting,(and make heroes of the CEOs who increase shareholder value by decreasing costs) let's have a more robust approach to the risk analysis..
But before everyone goes patting themselves on the back because this didn't happen to them...let's remember...there but for the Grace of God go I.
There has been a lot of talk about the cost-cutting measures that BP underwent and how they had a risk profile of the drilling which identified that there was a potential of a spill (although I'm sure that risk profile never calculated anything quite of this magnitude). Yet this is what many companies do, on a regular basis.
I'm not excusing BP, as I wouldn't excuse any other firm that put lives at risk, however minutely, in the pursuit of a few more dollars. But let's be real...it happens all the time. Do you really think that every little screw that goes into holding an airplane together is the best money can buy? It will certainly meet standards but why get the Cadillac when the Volkswagen will do?
Procurement organizations throughout the world are being asked to find every nickel and dime and sometimes this means compromising quality and taking risk. Why have a relief oil well standing by, at a huge cost, when the risk of ever having to use it is minimal? I'm sure at this point BP wishes they had spent the few million more, as opposed to the billions they now need to fork over.
So all of us need to ask how much risk is acceptable. There is no magic bullet on this one...but I do believe that there is a lot of scrambling around the world in corporations today asking that question. I think often the risk assessments fall short...they deal only with the percentage of the risk...and don't go to the worst case scenario and analyze in great detail the potential downsides Why? Because of course, when does that ever happen?
Ask BP...it can happen and does....so before making risk pronouncements and cost cutting,(and make heroes of the CEOs who increase shareholder value by decreasing costs) let's have a more robust approach to the risk analysis..
But before everyone goes patting themselves on the back because this didn't happen to them...let's remember...there but for the Grace of God go I.
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