Analysis Of Bps Operational Risk Management Management Essay

Analysis Of Bps Operational Risk Management Management Essay British Petroleum PLC (BP), one of the worlds largest oil and gas companies, is headquartered in London, United Kingdom. It provides its customers with fuel for transportation, energy for heat and light, retail services for gasoline and petrochemical products for everyday items (About BP, 2011). The Companys operations primarily include the exploration and production of gas and crude oil, as well as the marketing and trading of natural gas, power, and natural gas liquids. At present, BP employs over 80,000 people and operates in more than 100 countries. It produces approximately 3.8 million barrels of oil per day and has 22,400 service stations worldwide (BP, PLc Swot Analysis, 2010). In 2010, the Company incurred incredible losses from the Deepwater Horizon Oil Spill Incident in the Gulf of Mexico due to lack of oversight and control of operational risks (McDonald, BP Oil Disaster Breaks Records, Puts Spotlight On Risk Management Failure, 2010). The Incident has caused disastrous biological environment, 13 peoples deaths and 17 others injuries (McDonald, BP Oil Disaster Breaks Records, Puts Spotlight On Risk Management Failure, 2010). Immediately after the Incident, the Companys risk management practices were investigated. The scrutiny ultimately led to the dismissal of its CEO, Tony Hayward (McDonald, BP Oil Disaster Breaks Records, Puts Spotlight On Risk Management Failure, 2010). In this report, we will explore how BP unsuccessfully managed its operational risks prior to the Incident, and the strategic steps that have been taken in order to mitigate the losses and prevent a similar crisis from happening again. Reasons that Led to BPs Exposure to the Incident According to McDonald, the Incident was mainly attributable to the poor operational risk management of the corporate executives who placed a low priority on the safety issues (McDonald, BP Oil Disaster Breaks Records, Puts Spotlight On Risk Management Failure, 2010). McDonald also mentioned that Hayward appeared to know nothing about the front-line operations in the Company (McDonald, BP Oil Disaster Breaks Records, Puts Spotlight On Risk Management Failure, 2010). Furthermore, BPs history of oil spill incidents demonstrated its poor operational risk management in the past years. These previous tragic incidents included the U.S. refinery explosion in 2005 and the Prudhoe Bay oil spills in 2006 and 2007 (Fineberg, 2007). Since the Company continued to ignore the safety issues and risk management even after these incidents, a more serious Incident in the Gulf of Mexico has occurred. Finally, BP failed to inspect the oil rig on a monthly basis as prescribed in the government regulation (Strickler, 2010). A government inspection report revealed that BPs Deepwater Horizon oil rig had missed 16 inspections in total since January 2005(Strickler, 2010). Financial Losses and Reputational Damage following the Incident Following the Incident, BP was required to reduce planned capital expenditures and increase asset disposals in order to provide additional liquidity (BP p.l.c, 2010). Moreover, a total pre-tax charge of $40.9 billion was recognized during 2010 (BP p.l.c, 2010). However, BP is still uncertain about the total amount that will ultimately be paid. The Company is currently being charged in a number of lawsuits that could lead to substantial costs (BP p.l.c, 2010). These costs may include the amount of pending and future claims, the potential expenses of implementing remedies sought in the various proceedings, and the amount of fines ultimately levied on BP (BP p.l.c, 2010). As seen in Appendix A, Moodys Investors Services and Standard Poors have downgraded BPs credit ratings immediately after the Incident. Although there have been slight improvements ever since, the current credit ratings are still lower than they were immediately before the Incident. The lower credit ratings prompted a large number of investors, who were holding BPs US Industrial Revenue/Municipal bonds, to exercise their option to tender the bonds for repayment (BP p.l.c, 2010). This caused BP a total repayment of $2.5 billion (BP p.l.c, 2010). The lower credit ratings could also limit the Companys access to new financing. In addition, the Incident has led to a significant drop in BPs share price. On June 25 of 2010, the share price went down to the lowest point of $27. 02, as compared to $60.48 on April 23 of 2010, the day of the Incident (BP plc (ADR) (Public, NYSE:BP) ). Along with the financial losses, the Incident has damaged BPs reputation, which may have a long-term impact on the Companys ability to build business relationships with new counterparties and access new opportunities (BP p.l.c, 2010). Moreover, the current counterparties, concerned about the additional financial and business risks following this Incident, may require the Company to provide collateral or other forms of financial security for its obligations (BP p.l.c, 2010). Risk and Liquidity Management After the Incident, BP has taken preventative measures to mitigate future unexpected events related to poorly-managed operational risks (McDonald, All Road Lead to CEO, 2010). On September 29 of 2010, the new CEO, Bob Dudley, announced a plan to establish a new safety division with sweeping powers to oversee and monitor the Companys operations around the world (BP Creates New Safety and Risk Division, 2010). The new division has been given the authority to intervene in all aspects of BPs technical activities. The divisions experts will be embedded in BPs operating units, including exploration projects and refineries. These experts have the responsibility to ensure that all operations are carried out in compliance with government regulations and auditing standards (BP, 2010). In order to further reinforce this new practice, Dudley has requested the head of the safety division to report directly to him so that all information regarding the Companys current operational risk status can b e conveyed in a timely manner (McDonald, All Road Lead to CEO, 2010). BP has also reinforced its accountability of risk management by restructuring its exploration and production segment from a single business into three separate functions-exploration, development and production (BP, 2010). This makes it easier for BP to monitor each function separately. To increase available liquidity, BP cancelled the ordinary share dividends in the first three quarters of 2010, secured additional bank lines totaling $12 million and announced its intention to sell up to $30 billion of assets (BP p.l.c, 2010). Conclusion Prior to the Incident, BPs executives overlooked the necessity of operational risk management. This made the Company vulnerable to operational risks. Even after the two oil spills between 2005 and 2007, BP still did not take effective measures to improve its risk management practices. Fortunately, the problem has finally been recognized by Dudley, who has initiated constructive plans to enforce operational risk management across all divisions in the Company. Appendix Appendix A: A comparison of BPs Credit Ratings before and after the Incident Before Immediate After Current Moodys Investors Service Aa1 (stable outlook) A2 (negative watch) A2 (stable outlook) Standards Poors AA (stable outlook) A (negative watch) A (negative outlook) Source: BP p.l.c. (2010, December 31). Annual Report and Form 20-F 2010. Retrieved March 20, 2011, from BP Global: http://www.bp.com/assets/bp_internet/globalbp/globalbp_uk_english/set_branch/STAGING/common_assets/downloads/pdf/BP_Annual_Report_and_Form_20F.pdf

Children Coping With Stress :: essays research papers

CHILDREN COPING WITH STRESS While some stress is normal and even healthy, children today seem to encounter many stressful life events at earlier ages. Stress shows itself in children by complaints about stomachaches, being nervous, trouble sleeping, anger flares, and infections. There are a variety of reasons for children to feel stress. Death, divorce, remarriage, moving, long illness, abuse, family or community violence, natural disaster, fear of failure, and cultural conflict may each heighten stress. Under stress, the heart rate and breathing are at a higher speed and muscles are tense. Multiple stressors worsen the stress level and the length of the stress. Our bodies need relief from stress to reestablish balance. Reactions to stress vary with the child’s stage of development, ability to cope, the length of time the stressor continues, intensity of the stressor, and the degree of support from family, friends, and community. The two most frequent indicators that children are stressed are change in behaviors and regression of behaviors. Children under stress change their behavior and react by doing things that are not in keeping with their usual style. Behaviors seen in earlier phases of development, such as thumb sucking and regression in toileting, may reappear. Typically, preschoolers lack self-control, have no sense of time, act independently, are curious, may wet the bed, have changes in eating habits, have difficulty with sleep or speech, and cannot tell adults how they are feeling. Preschoolers under stress each react differently. Some behaviors may include irritability, anxiety, uncontrollable crying, trembling with fright, eating or sleep problems. Toddlers may regress to infant behaviors, feel angry and not understand their feelings, fear being alone or without their parent, withdraw, bite, or be sensitive to sudden or loud noises. Feelings of sadness or anger may build inside of them. They may become aggressive or angry, have nightmares, or be accident prone. Just as children’s reactions are each different, so are their coping strategies. Children can cope through tears or tantrums or by retreating from unpleasant situations.

Cathedral by Raymond Carver Essay -- Raymond Carver

Cathedral: A Lesson for the Ages Raymond Carver’s short story, â€Å"Cathedral,† portrays a story in which many in today’s society can relate. We are introduced from the first sentence of the story to a man that seems to be perturbed and agitated. As readers, we are initially unsure to the reasoning’s behind the man’s discomfort. The man, who seems to be a direct portrayal of Raymond Carver himself, shows his ignorance by stereotyping a blind man by the name of Robert, who has come to stay with he and his wife. From the very beginning, Carver shows his detest for Robert but over the course of the story eases into comfort with him and in the end is taught a lesson from the very one he despised. The story begins with a description of the relation’s between he, his wife and Robert. It is unveiled that Robert employed Raymond Carver’s wife, whose name is never stated, ten years previous by having her read reports and case studies to him since his blindness would not permit him to do it himself. She hadn’t seen him since those days but â€Å"she and the blind man kept in touch. They mailed tapes and sent them back and forth.† (506) The story also is set up by briefly describing Carver’s wife’s past relations with her first husband. Their past marital troubles seem to be a main basis for the wife’s and Robert’s extended contact. After this background history, the story then jumps into the present with the Blind man on his way to stay for a night. The blind man is invited to stay with the Carver’s by Raymond’s wife for he has just been through the death of his own wife and is now alone. Even this being the case, Raymond Carver’s distaste for the blind man is evident from the first paragraph on. â€Å"I wasn’t enthusiastic about his visit. He was no one I knew. And his being blind bothered me.† (506) Carver’s distaste for Robert is blatantly apparent even subsequent to his arrival at their home. It also becomes quite clear that his wife disapproves of his attitude toward Robert and fails to see how he could be so self-centered. â€Å"My wife finally took her eyes off the blind man and looked at me. I had the feeling she didn’t like what she saw. I shrugged† (509) The other emotion highly present from the beginning is that of the attitude of Robert. We are introduced to what appears to be a quick witted and pleasant man, especially considering the recent death of his wi... ... point the strong change in interaction between the two characters. The blind man diligently places his hand on that of Carver and they draw, together. The two are intently drawing the cathedral when Robert asks Carver to keep drawing but with his eyes closed too. He obeys and continues this is the climax of the story for Carver now briefly gets a glimpse of what it is like to live with the ailment of blindness. He is temporarily awed at the feeling for it is one he has obviously never experienced. â€Å"It’ really something†, he says (515) Although it took this lesson, Carver now seems to understand, even if only for a fleeting moment, his own prejudice and feels compassionate with Robert. He begins the story with a quick judgment but ends with a lesson that we can all learn from. The two gentlemen appear seemingly different and in the beginning but learn form one another and in the end grow to indeed appreciate one another. It seems ironic though that although Robert rendered the physical ailment, we see Carver too was blind to many things. Works Cited Carver, Raymond. "Cathedral." The Harper Anthology of Fiction Ed. Sylvan Barnet. New York: Harper Collins Publishers, 1991.