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BP Revamps Risk Management; Forms Oversight Unit

By Caroline Mcdonald
National Underwriter
In response to the Gulf Coast oil spill disaster in which 11 people were killed, British Petroleum said it is forming a safety and risk unit that will report directly to the company’s incoming chief executive officer. Ceres Director of Oil & Gas Industry Programs Andrew Logan says that BP’s announcement may say more about BP than it does about the industry

In response to the Gulf Coast oil spill disaster in which 11 people were killed, British Petroleum said it is forming a safety and risk unit that will report directly to the company's incoming chief executive officer.

BP said today that the Safety & Operational Risk function will have authority to intervene in all aspects of BP's technical activities. It also will have its own expert staff embedded in BP's operating units, including exploration projects and refineries, the company said.

BP noted that the "powerful new organization" is designed to strengthen safety and risk management across the BP group. It will be headed by Mark Bly and report directly to incoming Chief Executive Bob Dudley.

This summer, a group of global investors called for tighter risk control measures, asking energy companies for their oil spill prevention measures. They also queried insurers, suggesting a more active loss control role in response to the BP disaster, according to CERES, a network of investors and environmental groups.

Andrew Logan, director of oil and gas industry programs for Ceres in Boston told NU Online News Service today that BP's announcement may say more about BP than it does about the industry.

"The fact that they are essentially creating almost a nanny-state throughout the company to oversee safety, says a lot about how broken the safety culture is at BP," Mr. Logan said. "Ideally safety is something that is part of everyone's responsibility and is integrated into everyone's work, and I think what BP has acknowledged is they have not been able to achieve that. Instead they have to have these safety folks embedded throughout the organization."

In a message to BP staff worldwide, Mr. Dudley said, "Our response to the incident needs to go beyond deepwater drilling. There are lessons for us relating to the way we operate, the way we organize our company and the way we manage risk."

He added, "As I take up my new role I am aware of two things. First, there is a pressing need to rebuild trust in BP around the world. Second, BP's people have both the commitment and the capability to rebuild that trust."

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