Lessons for Finance Executives in the BP Oil Spill

The BP oil spill is going to end some executive careers - take note...This is gonna hurt. BP has already lost tens of billions in market cap, they are going to lose tens of billions in cleanup, damages and legal fees, and that's not the worst of it. The lawyers and plaintiffs are circling and there is talk of forthcoming suits for corporate negligence resulting in lost earnings and market value. Yes, this has quickly moved from an environmental disaster to a business disaster, and for some BP employees, those most directly involved and their executive leadership, jobs will be lost and careers and wealth destroyed.

Finance leaders talk a lot about "risk". We talk about personal and corporate responsibility, corporate liability, and "managing" risk. Notice how quickly and easily this operating issue has become a business issue and how the damage is spreading from the environment to the company to the people. This is an abject lesson on the perils of working as an executive at any company today - public or private - and how the risks of your company are really your personal risk as well.

It is impossible to stay on top of everything in your department much less everything at a sprawling company. But this issue should be a warning to us all that we need pay more attention to risk at every level of our organizations. That insurance only goes so far and having it (even in all of its myriad forms) should not make you complacent. That everything stems from those doing the work: whether they are our employees or those of a contractor. That tomorrow could be your BP, or your "oops, our systems just released our customer's social security numbers", or "our car's brakes are failing".

Today you should set some time aside to think about what you can do as a financial leader to drive the processes and procedures through your company which will minimize risk to all. Think also about how people drive everything of value (or destruction of value) at your company and about how the tone is, always, set at the top. Make sure you and your fellow executives are setting the right tone, leading by example, and putting in place the institutions that will serve your company well for years.

Oh yes, one more thing: stay off the front page of the Journal unless your PR firm puts you there.