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BP CREATES NEW POWERFUL SAFETY AND RISK DIVISION

New safety division has sweeping powers to oversee and audit world-wide ops

BP has announced creation of a new company Safety & Operational Risk function with authority to intervene in all aspects of BP’s technical activities.

The function will have its own expert staff embedded in BP’s operating units, including exploration projects and refineries. It will be responsible for ensuring that “all operations are carried out to common standards, and for auditing compliance with those standards.”

The organisation, headed by Mark Bly, will report directly to incoming chief executive Bob Dudley and will strengthen safety and risk management across the BP group.

The decision is one of a number of major changes announced by Dudley as he prepares to take over his new role on October 1 including:

  • re-restructuring the ‘upstream’ business into three divisions – Exploration, Development and Production; 
  • wide-ranging review of how the company manages third-party contractors; and
  • review of how the Group incentivises business performance, including reward strategy, with the aim of encouraging excellence in safety and risk management.

The company said the planned review of its performance and reward strategy would focus on how to deliver better safety and risk management, allied with strong leadership and the creation of enduring value for shareholders.

Dudley said:

“These are the first and most urgent steps in a programme I am putting in place to rebuild trust in BP – the trust of our customers, of governments, of our employees and of the world at large. That trust is vital to the restoration of shareholder value which has been so adversely affected by recent events.

The changes are in areas where I believe we most clearly need to act, with safety and risk management our most urgent priority. This is a deeply challenging time for BP.

The Macondo incident was a tragedy that claimed the lives of 11 people, caused injury to many others and had a widespread environmental impact. 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 organise our company and the way we manage risk.”

Comment

The massive difficulties at BP provide a reminder for all and particularly for larger construction businesses. The potential for harm arising from construction operations may be less than in the oil exploration and production sector – but it remains significant. The BP review of how the company “manages third-party contractors” may strike a chord with CDM principal contractors. 

The best of boardroom intentions and messages on safety can be eroded, misinterpreted or ignored as they cascade throughout a management structure. A robust, powerful and independent safety function is vital to help maintain a sensible balance between competitiveness and protecting people or the environment.

The BP experience shows how quickly risk management systems and reputational risk can be shattered.

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