The Black Swan Essay Example | Topics and Well Written Essays - 750 words

The Black Swan - Essay Example Based on the example given, it is clear that the Internet is one of the encouraging events that have occurred. Conversely, Bp Mexican Gulf oil spill could be termed as a discouraging unforeseen event. Question 2 Yes, it makes sense to allocate resources to prevent a black swan event. Based on what happened to BP, it could be seen that the company would have prevented the disaster by allocating reasonable financial resources for structural expansion. BP’s partner, Anadarko, points out that the company made a poor choice and unreasonable measures by allocating money to the firm but instead management of the company advanced personal issues leaving the company with structural issues. This made the company vulnerable to any disaster. Both BP’s partner Anadarko and American oil industry agreed that BP has been in the forefront to cut the cost of company instead of improving the company technically (Correa n.d). Question 3 Yes, it makes sense to devote resources to contain a black swan event in case it occurs, which this is clear from the Bp oil spill. The spill occurred after installation of pipes with the use of limited centralizers. From the manager’s email, it is clear that the financial allocation was insufficient. If the company had allocated more money for procurement of more centralizers, the oil spill disaster would not have occurred. In addition, the American oil industry and the Bp partner agree with allocation of more resources for risk management. The company tried to cut costs, which is clear from the unjustifiable number of centralizers. The number of centralizers installed was six instead of 21 recommended centralizers by the engineers (Marianne 2010). Furthermore, there is a need for more financial resources for structural strengthening to avoid future catastrophe, the case of Bp Oil Company, it would have averted black swan had it allocated $7 billion to $21 billion for safety measures like procurement of safer head pipes. Quest ion4 Yes, human error is different from a black swan event because it is a decision that individuals make and at the end, it causes a disaster. For example, Bp oil company management decided to use six centralizers instead of the recommended 21 centralizers. This is a human error because someone made an undesirable decision. Conversely, black swan events cannot be the same as a human error because it cannot be predicted using past information or scientific approach. Yes, human error can lead to Black Swan, considering the 2008 financial crisis, it would have been easily prevented if financial experts had taken into consideration the financial mistakes which were already visible in the year 2006 (Marianne 2010). The case of Bp Oil Company, whereby the disaster of oil spill occurred, it is clear that human error leads to black swan, oil spilling and causing huge environmental pollution and making the company to into financial crisis. As pointed out above the use of less number of cent ralizers against the recommended number is human error that leads to black swan. Question 5 As an executive of Bp, my consideration would be redundancies wells. With little amount of money available I will have to invest on the remaining well. The extra well will help incase another disaster occurs. Precautionary measures should also be put into consideration. For example, the company will have to install acoustic shutoff switches to prevent offshore oil spills. In addition, an insurance