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Plan and pay to prevent disasters
By Lauren | May 7, 2010
Continuing my Friday series on keeping your business out of court, we need look no further than British Petroleum and Transocean for this week’s example of bad litigation risk management.
When BP’s offshore drilling rig, run by Transocean, blew up on April 20th and started hemorrhaging oil into the Gulf of Mexico, it created not only an unprecedented environmental mess, but an equally gargantuan legal mess for the two companies. U.S. regulation did not require the rig to be fitted with an accoustic switch and the companies didn’t voluntarily install one. Admittedly, those switches cost about $500,000 apiece, but experts estimate that the economic impact of this massive oil spill could total $14 billion or more. By comparison, the cost of that switch would have been decimal dust. And that doesn’t even take into account the permanent damage the oil spill is likely to do to the once-beautiful Gulf coast, or the damage this debacle has done to the public’s opinion of BP and its industry. Odds are good that oil companies will soon find themselves facing much more rigorous regulatory restrictions than they would have if they’d voluntarily taken steps to prevent this disaster.
Businesses around the world are looking for ways to save money right now, but it isn’t smart to hoard pennies that could protect your company from a million-dollar mistake. Take the time to think through worst-case scenarios - what kind of massively expensive damage could your company do? Then, buy protective equipment or implement preventive strategies to minimize the risk of that event occurring. It could cost a little money, but that’s a small price to pay to avoid a legal and public relations nightmare.
Topics: Business Ethics, Lauren Recommends, Risk Management, Social Ethics, ethics |
May 10th, 2010 at 3:35 pm
There is much truth in what you say. Many business people are penny-wise and pound-foolish and there has been evidence of this in recent times, even in the car manufacturing industry.
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