simple costly mistakes

Simple, costly mistakes

It’s shocking. And the more you read and uncover the worse it gets.

The BP oil spill in the Gulf of Mexico illustrates quite amply how important it is to get the basics right when dealing with a crisis.

Remind ourselves this is a British company with a global reach. Everything it does is scrutinised and yet it doesn’t scrutinise itself in terms of risk in an oil – and gas – spill that would literally sink most other businesses out of sight.

Why do so many large scale public and private sector organisations simply get it wrong when it comes to the big issues?

BP has failed to adopt some simple communications principles when they discovered they had a major crisis on their hands. They didn’t accept blame early enough, they didn’t apologise properly and they didn’t take action swiftly enough. If they did then they certainly didn’t demonstrate it in any kind of proportionate way. To compound their short-sightedness they then assume that all will be fine if they produce a plan and spend millions of dollars trying to put it right.

Without the sign of a senior figure on site making commitments then this would only get worse for them in terms of reputation, and it has. The BP brand has been battered in and out of the markets and they have lost millions day by day as they struggle to play catch up with the PR crisis they have created.

Barrack Obama, quite rightly, has taken the moral battle to them and they will not be allowed to compromise any further in practical and financial actions.

Visiting the BP website tells us that to date more than 80,000 claims have been submitted and almost 41,000 payments have been made, totalling more than $128 million.

The cost of the response to date amounts to approximately $2.65 billion, including the cost of the spill response, containment, relief well drilling, grants to the Gulf states, claims paid, and federal costs. On June 16, BP announced an agreed package of measures, including the creation of a $20 billion fund to satisfy certain obligations arising from the oil and gas spill. It is too early to quantify other potential costs and liabilities associated with the incident, and what about the cost to nature; eco systems potentially lost forever.

One can only hope the senior executives at BP have learned the cost to their reputation of not doing the simple things well when you find yourselves in a major crisis. And hopefully, other businesses can learn from this too.

Written by Simon Turner, at Freshfield

For more information, please contact Simon or the Freshfield team on 01772 888400.

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