Managing Risks

A New Framework. by Robert S. Kaplan and Anette Mikes

WHEN TONY HAYWARD BECAME CEO OF BP, in 2007, he vowed to make safety his top priority. Among the new rules he instituted were the requirements that all employees use lids on coffee cups while walking and refrain from texting while driving. Three years later, on Hayward’s watch, the Deepwater Horizon oil rig exploded in the Gulf of Mexico, causing one of the worst man-made disasters in history. A U.S. investigation commission attributed the disaster to management failures that crippled “the ability of individuals involved to identify the risks they faced and to properly evaluate, communicate, and address them.”

Hayward’s story reflects a common problem. Despite all the rhetoric ...

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