BP: lessons learned

The BP oil disaster in the Gulf of Mexico offers some hard lessons for risk managers. It also shows the essential importance of the rule of law and how easily it can be threatened by the court of public opinion, argues David Rowe

After recently returning to the US following six years living in the UK, I have watched daily coverage of the BP oil spill with morbid fascination. Few recent events have provided such an extended object lesson in risk management, and much of what can be learned has implications for financial institutions – although traditional distributional tools such as value-at-risk have little to offer in response.

The simple fact is that offshore oil drilling has been remarkably successful for the past 30