Case study of BP risk management failures

RISK MANAGEMENT FAILURES OF BRITISH PETROLEUM

INTRODUCTION

British Petroleum (BP ) is a major player in the energy industry Worldwide , it is in the business of energy , fuels , petrochemicals retail services , gasoline , industrial and motor lubricants , solar power and other services (BP , 2007

BP formerly known as Anglo-Persian Oil Company or APOC is now providing worldwide services in six continents such as : Africa , North and South America , Australia , Europe and Asia . Their head office in London oversees their business interests in many parts of the globe . Most of their oil resources

are coming from the various onshore locations in the Caspian Sea , Mediterranean Sea and in the Gulf of Mexico , as well as offshore operations in Angola , Azerbaijan , Trinidad , Algeria , Alaska and the famous BTC (Baku-Tbilisi-Ceyhan ) pipeline running through Azerbaijan , Georgia , and Ceyhan Marine Terminal in Turkey (BP , 2007

Not too long ago , BP diversified their business operations from energy providers , supplier of lubricants and other petroleum products to selling other product lines like convenience items , bread products and coffee to their consumers . Their gross income from the retail business represented only two percent of their six billion they continue to expand their operation because their profit in convenient shops is higher than their oil revenues (BP , 2007

BP products and services have the following brands : BP , AM /PM , Arco Aral , Castrol and the Wild Bean Cafe . BP stands for Beyond Petroleum . They set for quality standards to produce energy for the consumers and to build innovation to help the public to gain access to quality living . The AM /PM convenience stores are found in different locations to provide quality services and to provide snacks or food and drinks to satisfy the hunger of their customers . Arco is one of the retail gasoline brands of BP . Together with AM /PM they serve about 24 million customers a month . Aral is the petrol brand of BP while Castrol is a brand of automotive lubricant . Together they bring better motor performance to machines and vehicles . BP does not only provide energy gasoline , petroleum and lubricants . They also offer pastries , sandwiches and drinks or coffee through their Wild Bean Cafe (BP , 2007

The Problem

BP just like any other businesses is facing different types of risks in its day to day operation . Recently the company experienced catastrophic accidents in its business operations and thinking of divesting their interest in several business units . Consequently , the CEO and its executives are under threat of losing their jobs because of pressures from its stockholders

Objectives of the Study

Main Objective

The main objective of the study is to analyze the different risk management failures associated with the business operation of BP

Specific Objectives : The specific objectives are to

Identify the areas of risk management to consider including the operational , financial , market and credit risks of the company

Establish a framework for the identification , measurement and control of risks and

Recommend methods to mitigate the probable occurrence of identified risks and increase the shareholders value of the company...