On April 20, 2010, an explosion at the Deepwater Horizon drilling rig started what is commonly referred to as the BP oil spill. Eleven people died and from four to five billion barrels of oil leaked into the Gulf of Mexico. During the ensuing public relations nightmare, BP took several questionable actions in terms of its accountability, acknowledgment of the accident’s seriousness, and release of information to the public. The organization’s negative perception was reinforced by CEO Tony Hayward’s famous comment “You know, I’d like my life back.” Over the course of this industrial disaster, BP suffered considerable reputational, legal, and financial damage.
Virtually every organization, regardless of size, geography, or industry, will face a crisis at some point. The chances are it will not be as significant as that faced by BP. But it’s not a matter of if a crisis will occur, but when — and to what extent it will impact the business. The ability to recover — the resiliency to rebound from financial and reputational fallout — depends on steps taken well ahead of time to manage the event and, most importantly, the associated communications.
Internal audit can play an essential role in crisis preparedness. With the risks inherent in crisis management, an audit of the process may be a given. But internal audit can also provide invaluable assistance by remaining proactively involved throughout the development and implementation of any crisis management plans, and by participating in post-crisis analysis.
Read the complete Internal Auditor article Resilience through crisis
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