Taking Risks with Risk

BP has been widely criticised for playing the blame game with the publication of its report on the Deepwater Horizon disaster. The report concludes that the explosion and resulting oil spill were caused by a complex series of mechanical failures and misjudgments by several companies.

While the report has been interpreted by many as a calculated attempt at mitigation, it has not and should not absolve BP from the responsibility of managing the contractors that work on its behalf. As this disaster has shown, taking risks with risk management can carry a hefty price – in the case of BP that’s several billion and counting.

The problem with risk management, as the Deepwater Disaster shows, is that it does not always focus on the real risk. Safety audits and evaluation systems currently focus on a detailed understanding of the technical equipment used and the methodologies applied. While this is obviously important, on its own, it is wholly inadequate.

What GoodCorporation has learned is that the most important elements to manage are the human ones. Most disasters stem from a poor decision, be it to cut corners or pretend that something has been done when it hasn’t.

Employees need to be empowered to speak up and stop even the most expensive practice or process when they can see that it isn’t working or worse, is likely to lead to a disaster on the scale of Deepwater or the Texas oil refinery. The latter is a case in point. Employees who could see the problem were working within a culture that provided no opportunity for them to speak up. Whistleblowing is not just about highlighting or exposing corrupt practices. A well-run business should encourage feedback from those at the sharp end. Without it, can those that manage a global business really know what’s going on?