The BP Crisis as a 'Preventable Surprise': Lessons for Institutional Investors

10 Pages Posted: 23 May 2012

See all articles by Raj Thamotheram

Raj Thamotheram

University of Oxford - Smith School of Enterprise and the Environment; Preventable Surprises

Maxime Le Floc'h

Network for Sustainable Financial Markets (NSFM)

Multiple version iconThere are 2 versions of this paper

Date Written: Spring 2012

Abstract

With high-impact, low-probability events increasing in frequency and impact, this article shows what investors can learn from BP’s Gulf of Mexico spill. It identifies six causative drivers, one of which is shareholder value maximization; shows why these events are “preventable surprises”; and describes how investors could choose to be enablers of sustainable capitalism rather than of the dysfunctional markets experienced today. Arguing for a fundamentally different mindset that includes, among other things, acknowledging the importance of “sustainable cash flows” and “ESG beta,” the authors highlight a practical management agenda for long-horizon asset owners who have a twenty-first-century understanding of fiduciary duty.

Keywords: Investment Beliefs, Long-Term Investment, Organizational Learning, Pension Fund, Risk, Sustainable Cash Flows

Suggested Citation

Thamotheram, Raj and Le Floc'h, Maxime, The BP Crisis as a 'Preventable Surprise': Lessons for Institutional Investors (Spring 2012). Rotman International Journal of Pension Management, Vol. 5, No. 1, p. 68, 2012. Available at SSRN: https://ssrn.com/abstract=2064738

Raj Thamotheram (Contact Author)

University of Oxford - Smith School of Enterprise and the Environment ( email )

United Kingdom

Preventable Surprises

London
United Kingdom

HOME PAGE: http://www.preventablesurprises.com

Maxime Le Floc'h

Network for Sustainable Financial Markets (NSFM) ( email )

United Kingdom

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