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Exxon oil disaster

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Exxon oil disaster

Disasters are unforeseen events that catch both people and firms off guard. This is because their happening is never expected or planned in advance. The effects of such events is that they cause great harm to the firm, an aspect that may push such entities to bankruptcy. An example of a disaster that caused harm to the firm is that experienced by Exxon, and this was in terms of the oil spill.

The Exxon oil disaster is regarded as one of the environmental catastrophes that is of unprecedented magnitude. In this case, history reveals that the 11 million oil spill caused the firm significant losses to a tune of $4.3 billion (Leacock, 2009). This amount was inclusive of the charges for mopping up the oil along with the punitive damages. The loss of such millions during that time would have translated to higher amounts in the present day, and this is based on the fact that the quoted figure only covered those people who suffered physically from the catastrophe.

Consequently, with such a notable loss, Exxon was forced to scale down its operations. In this case, it had to reduce its stock as it could not be able to afford large volumes of stock as a result of the damages that the catastrophe caused it. Apart from that, the firm also had to lay off some workers. This was one of the ways of absorbing the shock caused by it. Last but not least, and the most obvious effect is that there was a reduction in the profitability of the firm.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Work cited

Leacock, E. (2009). The Exxon Valdez oil spill. New York: Facts on File.

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