8. The Bystander Board: BP and Deepwater Horizon

The key aspect of bystander boards is where the board fails to work together and no one steps up to take responsibility at a critical time. This diffusion of responsibility manifests itself in the lack of challenge, enquiry and scrutiny especially by the independent directors. This can be especially dangerous when the company is faced with a major disaster such as BP and the explosion on one of its contracted oil rigs in the Gulf of Mexico. As a consequence the company was faced with a stream of civil and criminal lawsuits including corporate manslaughter and had to pay over $65 billion in fines. The board did not initially respond to the crisis since they had contracted but did not own the rig. This was compounded by having a newly appointed chair with no experience of the sector and there were directors with little experience overseeing a large complex business.