Submitted by: Submitted by keverhart
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Category: Other Topics
Date Submitted: 12/13/2010 07:17 PM
Recognizing and Minimizing Tort and Regulatory Risk
In today’s business world most companies are affected by governmental laws and regulation. Some in the form of merely collecting and paying the correct amount of taxes due while other companies such as Alumina, Inc., are faced with various regulations due to the unique nature of its business. Throughout the years, the government has gradually become stricter in regulating businesses and their products due to issues such as protecting the environment and the health of Earth’s citizens. Therefore, it is crucial for a company to develop a plan which identifies and manages regulatory and tort risk through preventative, detective, and corrective measures.
Preventative
The first step in this plan constitutes the preventative measures every company should take. This involves understanding how the company’s policies, products, and manufacturing processes function and identifying any areas which could potentially become a risk for litigation or non-compliance with regulatory agencies. This process entails examining the minute details of each process and evaluating the “what ifs” associated with each. If any potential issues are discovered, the organization can immediately make the necessary corrections possibly preventing any violation or litigation issues rising from accidental negligence.
In the example of Alumina, Inc., the company had been found to be in violation of environmental discharge norms after a routine check by the Environmental Protection Agency (EPA). Immediately after receiving the violation, Alumina took the necessary steps to correct its negligent behavior however, if the company had first carefully examined the nuances of its manufacturing processes it might have been able to avoid the imposed violation on its otherwise perfect record.
Detective
The second step in managing regulatory and tort risk is the detection of any issues that may have once been unforeseen through continuous process...