The present study aims to analytically evaluate and implement diverse policies of pinwheel risk management action framework for the corporation BP Plc. formerly known as British Petroleum. BP Plc is essentially a publicly dealt British global oil and gas company headquartered in England (bp.com 2017). The corporation BP plc. is regarded as the sixth largest company in the world that is operating function in oil and gas segment as well as the sixth major energy company from the perspective of market capitalization. However, the company BP carries out function in over and above 70 countries that manufactured around 3.4 million barrels every day and has evidenced reserves of approximately 17.18 billion barrels of diverse oil equivalents (bp.com 2017). Furthermore, the corporation BP has on top of 17200 facility stations across the worldwide and has the biggest segment operating in the United States (bp.com 2017). In particular, the main products of the corporation BP comprises of mainly petrochemicals, petrochemicals, motor fuels, petroleum, aviation fuels as well as natural gas.
As rightly indicated by Pritchard and PMP (2014), Pinwheel framework fundamentally has the capability to support organization in becoming tactically more agile as well as aligned. The introduction of Pinwheel Framework in the organization calls for the need of an expert team for development of an effective strategy and corporate development. The specialized team can scrutinize strategies and effective schemes that are in line with the specific trade off that exists between risk as well as return. Detailed analysis of the operations of the corporation reveals the fact that the main risks faced by the company BP comprises of macro-environment risks such as regulatory risks in addition to diverse demographic risks among many others. In addition, the other risks comprises of market risk, credit risk and risk of liquidity. Nevertheless, the corporation BP plc also encounters the risks related to products that includes impermanence, inadequacy of longevity along with indisposition. Critical analysis of operations of BP Plc also reflects the existence of operational risks that orients around financial commentary and administration of change in business organization (Sadgrove 2016). Thus, to certain extent, it is compulsory for the management of the corporation to handle the overall risk that can be highlighted by utilization of the Pinwheel action framework and the manner in which it can be used for purpose of business decision making.
As correctly put forward by Sadgrove (2016), the pinwheel action framework stresses on the linking different units of business that requires appropriate management of enterprise risk, diverse control functions, leadership along with the board. Even as the business enterprise BP plc had effectual strategic planning framework, the company required a better capability to evaluate intelligence of business and appraise the potential effect of diverse strategic opportunities along with risks faced by business organizations. However, the structural design is necessarily based on specific best practices along with competitive intelligence acquired from diverse interviews with different other firms and consultants.
Sadgrove (2016) opines that business leaders have the need to use the pinwheel action framework for making it function appropriately. Nevertheless, the process of implementation of pinwheel action framework can be considered to be indispensable as this helps in the procedure of development as well as operationalization of strategic planning framework of the corporation. Sadgrove (2016) put forward the view that this particular framework can thus in turn assist in the procedure of development along with optimization of the procedure. The pinwheel action framework also entails functioning through continuous strategy, financial planning as well as process of analysis. Besides this, business functions of the organization BP along with the corporate leaders function in a specific way at the time of operating by means of own manner (von Münchhausen et al. 2014). It is essential for different diverse groups involved in the top as well as bottom interact and exchange information so that the entire process integrates different insights, data along with information. Nevertheless, the ultimate objective is to ensure that all the different segments of the company are aligned that is particularly top down.
As rightly indicated by Sadgrove (2016), the key steps involved in the process of implementation of Pinwheel Framework initially includes comprehension of the alignment of formal governance strategy with the particular risks as well as rewards. The process of implementation also includes initiation of the formal procedure that can help in implementation of framework based on culture of the corporation BP. In addition to this, the process also includes reinforcement of the desired culture and use the top down flow to subsidiaries. Furthermore, the process of implementation of the framework also calls for the need for generation of incentives for all the leaders of the firm in a bid to support and adopt the procedures as well as framework. Meanwhile, it is also important to align with the performance and best practices involved in enterprise risk management. Finally, it is also obligatory for the management of the firm to ensure collaboration between CEO and diverse subsidiary units and clarify the role of the management role in each phase of implementation.
Figure 1: Pinwheel Framework: BP
(Source: Olson and Wu 2015),
As rightly indicated by Olson and Wu (2015), the procedure of institution of the pinwheel action framework comprises of the procedure of planning, critical analysis of the business intelligence, refining of diverse tactical purpose as well as vision, definition of objectives along with targets, determination of particular planned primacies, recognition of serious initiatives and analysis of overall strategic presentation. Pritchard and PMP (2014) mention that the pinwheel action framework orients around constant combined transaction of information between specific business units as well as team of corporate managerial leadership, and among the leadership as well as the board of directors of the corporation. Nevertheless, establishment of business strategy of the corporation, handling of risk as well as specific financial planning along with team of the company BP operate thoroughly with business sections. This aids the process of establishment of primacies, establishment of objectives, optimal apportionment of resources, and development of plans and analysis of performance along with determination of rewards.
Pritchard and PMP (2014) opine that the procedure of analysis of business intelligence comprises of using PESTEL analysis for undertaking a detailed analysis of diverse exterior factors as well as forces that is having potential impact on the functionalities of the corporation. However, this too comprises of evaluation of political, economic, social, environmental, and technological along with legal facets of the corporation BP plc. However, this phase of implementation of the particular pinwheel action framework for management of risk takes into account the effect of different micro-economic facets on the particular industry for oil and gas, their list of clients, evaluation of environmental dynamics along with particular trends that can exert impact on the overall buying behaviour of the target consumers. In addition, Sadgrove (2016) suggests that this phase of implementation of the pinwheel framework is advantageous since this assists in recognizing all the competitors together with the competitive advantage that particular consumers can consider. In addition to this, this phase of the pinwheel framework execution is advantageous since this aids in understanding experiences of the consumers along with the type of diverse products along with services modification that is obligatory for optimization. Furthermore, appraisal of business intelligence encompasses identification of roles along with resources that are engaged in business innovation (von Münchhausen et al. 2014).
As indicated by Sadgrove (2016), the procedure of application of the pinwheel framework comprises of valuation and modification of the purpose on top of vision of the company after detailed understanding of significant trends on top of vital external aspects. For instance, BP Plc’s vision statement reads that the corporation functions at basically at the boundaries of predominantly the energy segment. Furthermore, the vision statement of the company also refers to the fact that the business exploits assets of world class quality, advanced technology, in addition to competence so as to meet up different energy requirements and provide long term worth. As Rosas et al. (2015) suggests that constancy in addition to clarity of determination along with vision is imperative.
The business BP possesses an ambitious goal that is flawless and compelling at the same time. However, in addition to this, the management of the corporation BP also has a transparent view of satisfying the requirements for energy delivering long term worth by exhausting superior quality assets, advanced technology, potential and understanding the way to achieve the energy requirements (Pritchard and PMP 2014). Again, this acts as a bonding focal point of work and serves as a catalyst for the attainment and maintenance of spirit of the whole team operating in the business.
Strategic priorities needs to be developed as this is considered as an important phase of application of the pinwheel framework. This stage essentially talks about institution of strategic primacies by the entire leadership team of the corporation BP Plc. In addition to this, this stage also have the need for valuation of the current strategy accompanied by consideration of possible strategic options (Olson and Wu 2015). For example, tactical substitutes of the corporation BP comprises of persistent emphasis on the customers, improved distribution, teamwork and improvement of result, brand besides configuration of culture (Mikes and Kaplan 2013).
Subsequent stage in the process of application of the pinwheel framework is the recognition of critical initiatives of the business. Fundamentally, this stage mentions that the administration of BP have the need to consider diverse initiatives along with investments that are significant for the effective application of the strategy and attainment of the organization’s performance objectives (Mikes and Kaplan 2013).
In particular, this stage encompasses determination of significant project signposts of the company BP, description of metrics of different indicators of performance that are both financial as well as non-financial, arrangement of initiatives with accomplishment of both economic as well as non-economic objectives of performance. Furthermore, this phase comprises of recognition of significant risk pointers that have the need to be tracked and monitored. This in turn helps in formation of sound operating risk management of the enterprise. Reviewed administrative goals of BP plc need to be assimilated in the functioning strategies of the corporation (Mechler et al. 2014). Thereafter, strategy for the attainment of the pre- determined objectives helps in associating the trajectory of the established plans. The gaps recognized in the business procedure can prove to be a risks to overall functions of the BP.
Following step in the procedure of appropriate implementation of the pinwheel framework contains measuring the presentation and performance of corporation against varied conventional targets (Marcelino-Sádaba et al. 2014). Besides this, the functioning plans together with the budgets necessarily needs to be tracked by particularly the financial controller of the company, chief financial officer (CFO) along with leaders of diverse segments. Administration of BP vowed to augment the risk management system after the disastrous incident of detonation of BP’s Deepwater Horizon. Therefore, administration of BP can continuously screen diverse safety structures and discard “long string design”, particular conventional risk indicators for changed industry practices in addition to operations so as to manage the risks better.
Lastly, the organisation can adopt effective corporate governance strategies that requires appraisal of the presentation of diverse competitors besides comparative advantages or else hindrances in definite competitive position (Lam 2014). Therefore, this calls for the need of observing vital information, assessment of strategic implementation along with risks. The risks refers to the ones that are involved in the course of achievement of the administrative objectives along with risks of conformance with agreement and reporting necessities of the company BP Plc.
Figure 2: Figure showing process of implementation of pinwheel framework
(Source: Gao et al. 2013)
As stated by Brender and Markov (2013), Systematic risk management involves establishment of effective policies for minimization of all the prospects of threats that are present in undertaking innovative business functions. Therefore, this process helps in generation of somewhat new policies, strategies and actions. Along with this, risk management process aids in determination responding to varied risky proceedings. Particularly, the systematic risk management procedure includes recognition of context, documentation of different categories of risks, examination of the risks and appraisal of the risks. Addition to this, the system also entails formation of background of innovation selected. Subsequently, this procedure also helps in recognition of risks for example technological threats, organizational along with societal threats, market risk, and financial threat on top of turbulence risk related to the innovative business practice. Consequently, the procedure comprises of examination of the recognised risk related to the business innovation (Bowers and Khorakian 2014).
Figure: Model for Management of Risk
(Source: Alexander 2013).
Conclusion
In conclusion, some of the main elements in the policies of risk management is to consider the internal and external factors like the market forces, the social and economic issue with regard to the customer and management behaviour. To do this, an effective corporate governance strategy is very important and requires a proper. Management of employees and inventory system will also be an important part in integration of different functions and ensuring changes and stresses in the business. In addition, the administration of BP also need to consider initiatives with regard to investments that will be helpful to the administration and enable performance of the organisations.
Reflective study: Benefits and challenges encountered as an outcome of Innovation and Risk Management.
The current study has helped me to understand the important concepts of risk that indicates towards combination of possibility along with magnitude of certain potential harm. As per my understanding, risks encountered by the business can be regarded to be either high or else low depending on probability of occurrence. The possibility of threats in the operations of BP is considerably very high as the company operating in the oil and gas industry are susceptible to various dangerous activities. The comprehensive understanding of diverse concepts of pinwheel action framework for management of risk has helped me to understand the way the risks of organizations can be reduced by execution of a proper framework and structural actions. The study of the pinwheel framework has also helped me to understand all the eight different consecutive stages involved in the process of alleviation of risky events and proper implementation of innovative practices and actions of business. In addition, the reflective study has helped me to comprehend an appropriate structured action that can be undertaken by company such as BP plc operating in the oil and gas industry that has high susceptibility to different kinds of threat. The reflection also has helped to appreciate and at the same time recognize the significance of collaborative functions of diverse groups and the exchange of evidence so as to ensure that the procedure assimilates all understanding regarding management of risk in the most appropriate manner. Again, the reflection of the study also assisted me to understand the manner and the actions needs to be implemented in a proper sequence form achievement of the absolute objective of the company. Nevertheless, the current study has also assisted me to comprehend and analyse the requirement of structural strategy, administration of risk, process of financial planning undertaken by expert teams of the company BP that in turn need to collaboratively operate with different business unit tacticians, chief financial officer (CFO), supervisors together with CEO as well as all other business unit executives.
Some of the areas to consider in risk management is to prioritize reliability and safety of the company operations. This is important as it enables the organisation to protect the welfare of the workforce, the community and the environment. The main goal is to ensure there is occupational safety and little or no harm to people working with the organisation. The main area of defence will look at identifying the risks and managing them. The company also needs to have a safety operational team, which will be called upon to set clear safety requirement when emergencies occur. Thirdly, there must be proper audit of risk factors and strategies to avoid them in future. When all these factors are considered by the organisation, then they will be able to meet their strategic growth during the harsh and easy economic times. It will also be needed when the company is going through market penetration and supply chain system. Through risk management organisation are able to distribute inventory and manage it well without fear of loss or damage.
References
Alexander, K., 2013. Facilities management: theory and practice. Routledge.
Bowers, J. and Khorakian, A., 2014. Integrating risk management in the innovation project. European Journal of innovation management, 17(1), pp.25-40.
bp.com. (2017). Cite a Website – Cite This For Me. [online] Available at: https://www.bp.com [Accessed 29 Mar. 2017].
Brender, N. and Markov, I., 2013. Risk perception and risk management in cloud computing: Results from a case study of Swiss companies. International journal of information management, 33(5), pp.726-733.
Gao, S.S., Sung, M.C. and Zhang, J., 2013. Risk management capability building in SMEs: A social capital perspective. International Small Business Journal, 31(6), pp.677-700.
Lam, J., 2014. Enterprise risk management: from incentives to controls. John Wiley & Sons.
Marcelino-Sádaba, S., Pérez-Ezcurdia, A., Lazcano, A.M.E. and Villanueva, P., 2014. Project risk management methodology for small firms. International Journal of Project Management, 32(2), pp.327-340.
McNeil, A.J., Frey, R. and Embrechts, P., 2015. Quantitative risk management.
Mechler, R., Bouwer, L.M., Linnerooth-Bayer, J., Hochrainer-Stigler, S., Aerts, J.C., Surminski, S. and Williges, K., 2014. Managing unnatural disaster risk from climate extremes. Nature Climate Change, 4(4), pp.235-237.
Mikes, A. and Kaplan, R.S., 2013. Towards a contingency theory of enterprise risk management.
Mikes, A. and Kaplan, R.S., 2013. Towards a contingency theory of enterprise risk management.
Olson, D.L. and Wu, D.D., 2015. Enterprise risk management (Vol. 3). World Scientific Publishing Co Inc.
Pritchard, C.L. and PMP, P.R., 2014. Risk management: concepts and guidance. CRC Press.
Rosas, J., Macedo, P., Tenera, A., Abreu, A. and Urze, P., 2015, October. Risk assessment in open innovation networks. In Working Conference on Virtual Enterprises (pp. 27-38). Springer International Publishing.
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