Mocondo

The BP Macondo Oil Spill:

The Failure of Corporate Risk

Management and Government

Robert Page, PhD

TransAlta Professor of Environmental Management and Sustainability

ISEEE, University of Calgary

CRUISE / CSERC , Carleton University

April 10, 2012

Introduction: The Changing Scale and Nature of Risks

This afternoon I wish to talk about the increasing scale and nature of risk –

the complex challenges in assessing risk – the means of managing risks by

corporations and government – through the vehicle of the BP oil spill in April

2010.

Risk management is about estimating the highly complex interconnections

between the individual factors in risk.

These include environmental, geophysical, geotechnical, economic, social, and

human errors.

Risk management is so difficult because it is about predicting the future

with all its uncertainties in combining and integrating individual risks to

estimate the required margin for safety.

75 BP (2012/04/10)

Introduction (cont.)

While complex technologies require complex risk assessment public policy is going in

the reverse direction with “smart” or limited regulation.

In our institute at the University of Calgary we are trying to investigate the dynamics

of energy systems for both corporate management and government regulations.

As the BP case shows some of our most destructive events are low probability / high

risk events which for financial reasons are often viewed as no probability – both techbased and extreme weather-based – Katrina more damage to US Energy then any

terrorist.

Also for both industry and government, it is easier and more straight forward to

estimate the benefits than the risks – until too late and a bad accident occurs.

But it is essential after such an event to assess and to ponder the management and

regulations essential so there is no repetition.

75 BP (2012/04/10)

Introduction (cont.)

This study is a product of the huge amount of sworn testimony and reporting...