This past week saw two unfortunately intertwined events unfold: the BP Deepwater Horizon well blowout/oil spill and the 2010 Annual Conference of the Risk and Insurance Management Society (RIMS). For those unfamiliar with RIMS, it is a global association with a membership of approximately 10,000 of risk management professionals.
Among the myriad of presentations, Nassim Nicholas Taleb was the luncheon keynote speaker one day of the week-long conference. Taleb is the author of the book The Black Swan: The Impact of the Highly Improbable. In Taleb’s context, a Black Swan is an event that is (a) so low in probablility that it is unforeseeable and (b) so catastrophic in impact that it changes history. In covering RIMS 2010, Risk Management Monitor blogged on Taleb and his presentation.
Which brings us to the Deepwater Horizon well blowout. An article in USA Today stated that in assessing the environmental risk of the well, BP assumed:
an accident leading to a giant crude oil spill and serious damage to beaches, fish and mammals was unlikely, or virtually impossible.
The sort of occurrence that we’ve seen on the Deepwater Horizon is clearly unprecedented,” BP spokesman David Nicholas told the Associated Press on Friday. “It’s something that we have not experienced before … a blowout at this depth.”
The [plan] conceded a spill would impact beaches, wildlife refuges and wilderness areas, but argued that “due to the distance to shore (48 miles) and the response capabilities that would be implemented, no significant adverse impacts are expected.”
Robert Wiygul, an Ocean Springs, Mississippi-based environmental lawyer and board member for the Gulf Restoration Network, said he doesn’t see anything in the document suggesting BP addressed the kind of technology needed to control a spill at that depth of water.
Even if a massive spill had been assessed, the question remains whether the risk assessment/spill response plan would assume that weather conditions would possibly hinder spill response effectiveness, and how quickly/effectively the underwater well would be sealed.
It appears that BP has found their Black Swan. And Black Pelicans, Black Seagulls, etc.