Crisis Management Practices - Example

Business Continuity Plan Contents Introduction 3 Section Executive Summary 4 Section 2- Risk Management Planning 5 Section 3- Business Impact Analysis 14 Section 4- Incident Response 15 Section 5- Recovery 17 Conclusion 17 References 19 Introduction A Business Continuity Plan is the formation of a technique through the identification of risks and perils confronting an organization, with an eye to guarantee that assets and human resources are safeguarded and are made to function in the occasion of a catastrophe. Business involves risk at every point of its operations. Organizations can confront an array of catastrophes that run from minor to disastrous. BCP normally will help an organization to keep working on account of numerous calamities, for instance, fires, however may not be as successful if a vast segment of the populace is influenced, for example, on account of an ailment episode. The Deepwater Horizon oil disaster, the biggest accidental leakage of oil into sea waters in account by far, brought about extreme ecological, health and financial consequences. The organization concede to 11 checks of crime homicide, two wrongdoings, and one lawful offense of deceiving the legislative body, and consented to pay more than USD4.5 billion in fines and punishments, the biggest unlawful determination in US account. Legal processes anticipated that will close in 2014 are progressing to figure out fines and payouts under the Natural Resources Damage Assessment and the Clean Water Act. BP confronts harms of up to USD 17.6 billion in the legal session. It took place in the year 2010, in which around 11 people were killed, seven were critically injured and over four million barrels of oil were spread within the Gulf of Mexico creating one of the most awful ecological catastrophes in the history of the USA (Natural Resources Committee, Democrats, n.d,). For handling these calamities efficiently, a risk management framework becomes necessary for the running of the business. Section 1-Executive Summary The present report deals with the risk management approach as practiced by the British Petroleum plc. BP is a British MNC that deals with oil and gas exploration and production. The firm is headquartered in London, England. It is the 6th largest energy firm in the terms of business capital, the 5th largest firm of the world as per the 2012 income records, and the 6th largest oil and gas firms determined on the basis of the productions in 2012. It’s one of the oil and gases "super majors" among six most renowned players in the same domain. BP has been included in some significant ecological and wellbeing episodes. Among them the 2005 Texas City Refinery blast is included, which created the demise of fifteen laborers and brought about a record-creating OSHA fine; The biggest oil slick of Britain, the breakdown of the Torrey Canyon; and the Prudhoe Bay oil slick of 2006, the biggest oil slick on Alaskas North Slope, that brought about a USD 25 million common punishment, the biggest for every container punishment around then for an oil spill. The severe impact of the explosion resulted in the immediate fall of the company’s share. The falling graph is shown below- Source: www.theguardian.com Section 2- Risk Management Planning Risk administration is carried out keeping in mind the end goal to evade dangers from emerging and likewise to minimize their results. Above all else, it is required to effectively distinguish all known dangers so all the conceivable dangers might be evaluated within time. Furthermore, it is obliged to figure out the results and likelihood of each one distinguished danger. In the wake of taking all the essential steps, diverse frameworks ought to be distinguished with the goal that dangers could be moderated totally. In the course of the most recent two decades, anxiety about oil spills and alertness among public has increased significantly. Prospective plans for opening Arctic and offshore regions for oil investigations have afresh brought on extraordinary alert (Etkin, 2009, p.3). Accordingly, this paper is concerned with the administration of oil slicks and oil spillage hazard in oil exploration programs. The incident of oil slicks is fundamentally a matter of likelihood. A probabilistic episode like oil slick occasion or oil slick contact to a naturally responsive zone cant be predicted in advance; just an estimate of its probability could be quantified (Scarlett, Linkov and Kousky, 2011, p.20). When applying danger administration practices; hazard evaluation ought to be carried out with a specific end goal to realize that what can happen at a specific time period and what the conclusion will be if it happens. Along these lines, it is important to discover the reasonable events that could prompt an oil slick, together with the feasible after effects (Imo, 2010, p.3). This paper will keep tabs on the information that will be analyzed through the Risk Management Plan to weigh up the recognized effects and risks in association with noteworthy activities of the industry domain and to establish the essential revival prerequisite. The noteworthy activities may be referred to as primary business operations that should carry on for supporting the business activities. The following table describes the risks involved with the firm- Key: VH = Very High, H = High, M = Medium, L = Low Risk Description: Likelihood Impact Priority Preventative Action 1. Oil spillage occurs due to release of crude oil from underwater wells and pipeline, or offshore drilling rig, or a tanker, frequently presenting a danger to marine life and environment. The overall environmental problem is caused by negligent or unintentional release of used gasoline solvents and crankcase oils and the natural seepage from the ocean floor greatly heighten the overall environmental problems. In order to address the oil spillage crisis, different methods, techniques and frameworks have been constructed. 2. Protests from the general people also played the role of a potential risk factor for the organization since their actions repeatedly brought forward the negative side of the organization’s business operations. Small groups of Protestants showed up on the streets against BP in a number of US cities. Around 50 people protested on a busy lane corner close to a BP gas station In Los Angeles. They carried placards and signboards that held "BP is not green, it’s deadly” and "Spill Baby Spill" written on it. Thus, be that as it may, the associations botch of people in general issue was poor to the point that stakeholders got insulted at BPs absence of transparency, its stonewalling, and clear sauciness about the natural harm and the demise of 11 individuals. BPs poor issue administration has actually encouraged the mushrooming of what could have been a neighborhood issue into a worldwide issue that may be too enormous for BP to survive (Bryant and Hunter, 2010). 3. During 2005 an outburst at BPs Texas City oil refinery took lives of 15 individuals and harmed more than 180 individuals. The mishap caused the firm US $2 billion in harms and claims. L VH H The tiered response methodology exhibits outstandingly convenient methods for arrangement of situations. It may be assessed that the most at risk situations will fall inside level 1, while extraordinary cataclysmic situations will practically absolutely be level 3. Organic Exposure Model is utilized to compute the volume, region or allotment of a populace exaggerated by amassing of oil components in the water, surface oil, and silt defilement. So as to fruitful location the emergency connected with oil spillage, Maritime Safety Authority i.e. MSA started to be to comprehend the issue related with oil spillage. Oceanic Transport Act started to be to take the accompanying steps for tending to the oil spillage emergency: advancing and manage the Marine Oil Spill Response Strategy; executing the National Marine Oil Spill Contingency Plan; underwriting Provincial Marine Oil Spill Contingency Plan; offering direction to the reaction staff; and allotting provincial and national on-scene officers. Reaction arranging procedures has additionally been set up which incorporate three primary alternatives: screen and grant debasing regularly; challenge the smooth at ocean; and shoreline cleanup. Recuperation instruments, for example, skimmers and sorbents are the starting line of defence against oil spills. They are utilized to bind and gather the spilled oil until it could be discarded rightly. Bio-remediation methodology can additionally be utilized which includes the utilization of micro organic entities keeping in mind the end goal to biodegrade the oils. Living procedures, for example, gelling, and organic operators could be utilized within fusion with mechanical methods for cleaning up oil spills. Gelling operators are most functional so as to keep away the oil from arriving at delicate territories and shorelines. Other reaction routines are the physical strategies and the panic plans are utilized to clean up shorelines and give sufficient ecological recuperation. In Situ Burning is an alternate strategy for managing spills which disposes of expansive amounts of oil, with pace and adequacy that counterbalance other evacuation strategies. By applying these different sorts of systems oil spillage might be regulated as it were. Additionally this, other schema could be International Convention on Oil Pollution Preparedness Response and Cooperation. Its objective it to expand the readiness level to respond to marine oil spills and additionally to aid universal collaboration and shared help in reacting towards fundamental oil spills (Msq, 2000, p.18). The new schema is the Oil Spill Crisis Analysis Model which is utilized to compute the courses of oil spills from theoretical spill areas to diverse ecological assets. The model processes the development of theoretical spills by continuously fusing time arrangement of two spatially gridded info territories: the ocean level winds and the surface sea momentums. Thusly, it surveys the emergency by utilizing a risk based appraisal investigation which watches conceivable events paying little mind to their high or low probability. The company constantly declared in front of the media how NOAA helped in the restoration program. NOAA works jointly with other natural resource trustees and when possible the parties responsible for the pollution. The damage assessment process promotes cost effective assessment and restoration- benefitting the public, the responsible parties and the environment. The firm declared that by the end of 2012 they were able to regain their positions and the group made superior development. The firm worked towards increased safety and put much effort towards the crisis management framework. The group continued to meet their commitments in restoring the conditions of the Gulf of Mexico. The firm sold many of its assets and lessened complexities. The group focused its investment functions on the segments where there are chances of increased margins. The company stated that they have developed effective safety and protection measures for their organization. The Galveston County Daily News had far reaching scope of the outburst on its "Tragedy in Texas City" portal (Frontline, 2010), which incorporates an article about OSHAs record 2009, $87 million fine against BP for absence of consistence with wellbeing regulations, and photos from more than five years of investigating the blast and its outcome. BP at first challenged the $87 million fine, yet consented to pay $50 million in August 2010. In the doubtful event of a spill, response handling procedures may incorporate three central choices: contest the slick at shoreline; seashore cleanup; permit and monitor degradation naturally; and challenge the smooth at ocean. Cleanup systems will rely on the climate conditions, the kind of oil, and the sort of environment in which the oil is spilt around then. The cleanup is set to be completed as per best industry standards. The response action needs an amalgamation of each one of the three choices. The methods picked will rely on upon achieving the best net natural benefits (Appea, n.d, p.6). Permit and monitor degradation naturally: This choice will be essential expected for seaward spills where the oil development is such that it is required to be scattered by both biotic and regular physical courses of action before it has sufficient energy to go into additional responsive seaside areas (Appea, n.d, p.6). Contest the slick at sea: This strategic method incorporates the utilization of compound dispersants, mechanical scattering and regulation and recuperation routines. Concoction dispersants are getting to be continuously more acknowledged as the best reaction strategy in a few circumstances, for example, profound water or unpleasant climate. It is an improved choice to divide oil at ocean, as opposed to allowing it to pollute foreshores. Under mechanical scattering, investigation and dissemination of oil might be backed by propeller wash from little specialty and tugs. Regulation and recuperation system is the best alternative to recuperate the main part of oil from the ocean surface before it reaches the shoreline (Appea, n.d, p.7). Shoreline cleanup: In circumstances where oil cant be prevented with a strategic device from arriving at the shore, it might where feasible be deflected far from delicate zones. The sending of seashore booms is respected to be a principle concern might and either regulation systems or mechanical scattering seems illogical here. Less important absorbent booms might be conveyed so as to present further insurance for delicate ranges (Appea, n.d, p.7). Section 3- Business Impact Analysis Business Impact Analysis is the process of analyzing the impact of the risk causing factors on the smooth functioning of the business. For the present scenario, the primary impacts of the various stages involved in the oil exploration and production phases can be classified as – 1. Prospecting stage causes noise, emissions and several harmful emissions 2. Exploration stage involves noise, emissions and discharges 3. Production and development stage creates noise, discharges and emissions causing harm to the environment and aquatic life. The secondary impacts could be related to anthropology ecology, socio economic conditions of the region, and health hazards. It was found from the online sources that the corporate managers are continuously challenged with important decisions with respect to the allotment of scarce resources among investments which are characterized by substantial financial and geological crisis. They have drawn the example of the petroleum industry which provides an ultimate setting for the analysis of the corporate crisis behaviour and its impacts on the firm’s performance. The third impact could be the organization’s extended focus on the safety measures of the business operations that previously used to suffer from inefficiencies due to the organization’s cost-cutting practices. Section 4- Incident Response Incident Response Plan refers to the prompt response action plan towards handling the hazard and preventing it from expanding its impacts. The checklist shown below includes the immediate actions that were followed when the Deepwater Horizon Spill took place- Incident Response  Actions taken Have you: assessed the severity of the incident?  Yes evacuated the site if necessary?  Yes accounted for everyone?  No identified any injuries to persons?  No contacted Emergency Services?  Yes implemented your Incident Response Plan?  Yes started an Event Log?  No activated staff members and resources?  No appointed a spokesperson?  No gained more information as a priority?  No briefed team members on incident?  No allocated specific roles and responsibilities?  Yes identified any damage?  No identified critical activities that have been disrupted?  Yes kept staff informed?  Yes contacted key stakeholders?  Yes understood and complied with any regulatory/compliance requirements?  Yes initiated media/public relations response?  No The firm is dedicated towards constant improvement in their crisis management measures as they had gained a valuable lesson from the Deepwater Horizon oil spill in 2010 and the incident of Texas City refinery explosion take occurred in 2005. In the month of May of 2012, Duane Wilson’s five-year board engagement as an independent specialist to offer an autonomous goal assessment of BP’s progress in employing the recommendations of the BP US Refineries Independent Safety Review Panel came to an end. BP’s OMS was commenced in the year 2008. The implementation of a wide-ranging management system like OMS throughout a global corporation is a constant process. OMS refers to the method for carrying out BP operations to relate to and to match to the essential standards and approaches on a continuous term, including definite time periods for the same as well as to constantly upgrade their company performance. OMS is a vibrant system. Occasionally after a preliminary evaluation cycle their operations are needed to carry on a fresh evaluation to create an improved prioritized framework according to any existing difference or a new gap that might have been recognized. BP strives to prepare its employees with the proficiency required to employ OMS and its related practices and processes. For instance, in adding to a devoted agenda to review the technological well control know-how of BP’s well location managers, they have been working hard to recognize safety-critical activities and the related leadership and technical skills to perform them. They have also put great efforts towards strengthening potential and capability by combining and normalizing their competence management curriculum. Their practice is being evaluated within numerous work categories, like offshore mechanism managers and well site mangers. BP has worked to standardize and centralize their approach to drilling procedures and errors of projects with the founding of the global wells organization (GWO) and the global projects organization in the year 2011 (BP, 2012). Section 5- Recovery Today the GWO recruits over 2,000 employees, causing the functional wells proficiency into a solitary organization with universal global policies. The GWO functions with the firm’s operational and safety crisis purpose with a perception to constantly lessen danger in drilling and therefore decrease the probability of an oil spill or accident to take place. BP has already set standards and requirements for Gulf of Mexico drilling activity that exceeds dictatorial essentials. Today the organizations have also developed several measures to prevent the crisis associated with the exploratory drilling among which seismic surveys are the most commonly used. Seismic surveys are conducted to collect data for 3D models applied to get knowledge about the location and size of oil fields (or bring out more oil from the existing reserves). The oil corporation always wished to lessen the charge of seismic surveys and develop the worth of information collected. Conclusion Thus it can be concluded from the entire report that risk management and risk planning are vital elements for an organization’s efficient functioning. In the case of BP, we can say that if the organization had concentrated much more on the safety measures of the industry rather than cost cutting factors, then it would have successfully prevented the occurrence of such mishaps like the Deepwater Horizon oil disaster. References Natural Resources Committee, Democrats, n.d. BP Oil Spill. [Online] Available at: http://democrats.naturalresources.house.gov Scarlett, L. Linkov, I. and Kousky, C., 2011. Crisis Management Practices. Washington: Resources for the Future. Imo., 2010. Manual on Oil Spill Crisis Evaluation and Assessment of Response Preparedness 2010. United Kingdom: IMO Publishing. Etkin, D.S., 2009. Analysis of U.S. Oil Spillage. Washington: American Petroleum Institute. Msq., 2000. Oil Spill Crisis Assessment for the Coastal Waters of Queensland and The Great Barrier Reef Marine Park. [Pdf]. Bryant, M. and Hunter, T. 2010. BP AND PUBLIC ISSUES (MIS)MANAGEMENT. [Online] Available at http://iveybusinessjournal.com/topics/leadership/bp-and-public-issues-mismanagement#.UvN8Tj2SyHc Frontline, 2010. BPs Troubled Past. [Online] Available at http://www.pbs.org/wgbh/pages/frontline/the-spill/bp-troubled-past/ Appea., N.D. Oil Spill Prevention and Response. Australia: Australian Petroleum Production & Exploration Association Limited. BP, 2012. Annual Report and Form 20-F 2012. [Pdf] Available at www.bp.com. Read More