The BP oil spill: a risk management failure
By Kimberly Lawrence
When BP's Transocean Deepwater Horizon rig exploded earlier this year, it killed 11 people and began an oil spill that ultimately poured more than 127 million gallons into the Gulf of Mexico, contaminating tens of thousands of square miles of ocean and shoreline.
This incident has raised serious issues of enterprise risk management as well as the responsibility of government regulators. While many inquiries are currently underway to determine the cause, industry must begin to address the issue of risk responsibility and liability that flow from this event. This is critical not only in terms of internal management procedures, but in light of the regulatory changes under consideration by the U.S. and Canadian Governments. This affects directly all offshore exploration, but indirectly the whole industry. The fallout from this event will be far greater than earlier ones, such as the Exxon Valdez.
"The BP oil spill, the largest in U.S. history, is one of those rare events that profoundly impacts industry practices and government regulations," says Dr. Bob Page, TransAlta professor of environmental management and sustainability in the Institute for Sustainable Energy, Environment and Economy’s energy and environmental systems group.
"The huge financial liabilities for the company—which may reach $50 billion—have created shock waves about risk management and offshore drilling practices right across the oil and gas sector. Industry must step forward proactively with solutions to handle these risks or government intervention will significantly increase costs and complicate the process."
Page is known nationally and internationally for his work on energy and the environment in areas, such as climate change and risk management. He is chair of the Government of Canada's national round table on the environment and the economy; chair of the management committee for the International Standards Organization ISO 14000 series of international environmental standards (Geneva); and a member of the board of directors for ENMAX Corp. From 1997 to 2007, he was the vice-president sustainable development at TransAlta Corporation.
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