Lessons from the Twin Mega-Crises: The Financial Meltdown and the BP Oil Spill

Abstract:     
This paper explores the synchronicity of two mega-crises we are now facing: The BP oil spill and the repercussions of the 2008 financial meltdown. It examines some key common threads in both of these crises. The overarching message is that firms must maintain a culture of social responsibility, must behave in an ethical manner, and must do everything possible to avoid societal harm. The three key lessons to be learned from the twin crises are to consider and mange risk in decision making; minimize conflicts of interest in the hope that executives will then not engage in actions that involve excessive risk to stakeholders; and that government regulation can be beneficial, rather than harmful to business and society – as long as it does not stifle innovation and growth.

Number of Pages in PDF File: 27

Keywords: BP Oil Spill, financial meltdown, risk, conflict of interest, regulation, deregulation, business ethics, self-interest

JEL Classification: A22, A23, G18, G21, G28, M14, Q28, Q20, Q38, D81, M19

working papers series