There are three things that Alumina must do to manage regulatory risk. The first is to use best practices even before laws are passed, Secondly, invite more communication between regulators and the company. Thirdly, ensure that employees are well-educated in the field so as to avoid any charges of non-compliance based on ignorance of regulation and the field in which Alumina works. All approaches are proactive and will achieve the end goal of keeping Alumina ahead of regulation. “The EPA encourages companies to self-identify problem lands and areas in exchange for reduced fines. Companies have hired executive-level managers such as vice presidents for environment or vice presidents for health, safety, and environment to manage a staff of in-house professionals who do everything from supervising a company’s current activities to investigating past activities to determine environmental problems. These problems are then reported to the EPA, and the company and agency work together to solve the problem and be certain cleanup is done where warranted” (Jennings, 2006, p. 473-74).

Tort liability can be detected by directing resources to an area that will specifically monitor and be educated in both regulation and the field in which the company does business. As in the Alumina simulation, it could have avoided the incident of negligence had it an audit team that would perform the same tests and more that the EPA would perform. By having audits on a regular basis, Alumina would not have to wait for the EPA to make a surprise visit to find out if it is in compliance or not. This will require companies to make every effort to recruit and keep expertise in the fields in which they deal.

Finally, by using best practices early to both prevent and detect problems, companies such as Alumina could quickly act to correct them. Inviting open communication with regulators, such as the EPA, will enhance a company’s reputation and making regulators and the public aware that the...