Managing risks: a new framework
When Tony Hayward became CEO of BP, in 2007, he vowed to make safety his top priority. Among the new rules he instituted were the requirements that all employees use lids on coffee cups while walking and refrain from texting while driving. Three years later, on Hayward’s watch, the Deepwater Horizon...
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| Format: | Journal article |
| Language: | English |
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Harvard Business Review Press
2020
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| _version_ | 1797090716921364480 |
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| author | Kaplan, RS Mikes, A |
| author_facet | Kaplan, RS Mikes, A |
| author_sort | Kaplan, RS |
| collection | OXFORD |
| description | When Tony Hayward became CEO of BP, in 2007, he vowed to make safety his top priority. Among the new rules he instituted were the requirements that all employees use lids on coffee cups while walking and refrain from texting while driving. Three years later, on Hayward’s watch, the Deepwater Horizon oil rig exploded in the Gulf of Mexico, causing one of the worst man-made disasters in history. A U.S. investigation commission attributed the disaster to management failures that crippled “the ability of individuals involved to identify the risks they faced and to properly evaluate, communicate, and address them.”
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Hayward’s story reflects a common problem. Despite all the rhetoric and money invested in it, risk management is too often treated as a compliance issue that can be solved by drawing up lots of rules and making sure that all employees follow them. Many such rules, of course, are sensible and do reduce some risks that could severely damage a company. But rules-based risk management will not diminish either the likelihood or the impact of a disaster such as Deepwater Horizon, just as it did not prevent the failure of many financial institutions during the 2007–2008 credit crisis. |
| first_indexed | 2024-03-07T03:22:42Z |
| format | Journal article |
| id | oxford-uuid:b7f8eecb-9d51-4301-9999-01385bdd0284 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T03:22:42Z |
| publishDate | 2020 |
| publisher | Harvard Business Review Press |
| record_format | dspace |
| spelling | oxford-uuid:b7f8eecb-9d51-4301-9999-01385bdd02842022-03-27T04:52:40ZManaging risks: a new frameworkJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:b7f8eecb-9d51-4301-9999-01385bdd0284EnglishSymplectic ElementsHarvard Business Review Press 2020Kaplan, RSMikes, AWhen Tony Hayward became CEO of BP, in 2007, he vowed to make safety his top priority. Among the new rules he instituted were the requirements that all employees use lids on coffee cups while walking and refrain from texting while driving. Three years later, on Hayward’s watch, the Deepwater Horizon oil rig exploded in the Gulf of Mexico, causing one of the worst man-made disasters in history. A U.S. investigation commission attributed the disaster to management failures that crippled “the ability of individuals involved to identify the risks they faced and to properly evaluate, communicate, and address them.” <br> Hayward’s story reflects a common problem. Despite all the rhetoric and money invested in it, risk management is too often treated as a compliance issue that can be solved by drawing up lots of rules and making sure that all employees follow them. Many such rules, of course, are sensible and do reduce some risks that could severely damage a company. But rules-based risk management will not diminish either the likelihood or the impact of a disaster such as Deepwater Horizon, just as it did not prevent the failure of many financial institutions during the 2007–2008 credit crisis. |
| spellingShingle | Kaplan, RS Mikes, A Managing risks: a new framework |
| title | Managing risks: a new framework |
| title_full | Managing risks: a new framework |
| title_fullStr | Managing risks: a new framework |
| title_full_unstemmed | Managing risks: a new framework |
| title_short | Managing risks: a new framework |
| title_sort | managing risks a new framework |
| work_keys_str_mv | AT kaplanrs managingrisksanewframework AT mikesa managingrisksanewframework |