Tort and Regulatory Risk

Tort and Regulatory Risk Plan

Businesses have an obligation to be in compliance with laws and regulations that govern today’s ever-changing society. Investopedia (2010) defines regulatory risk as, “The risk that a change in laws and regulations will materially impact a security, business, sector, or market” (“Regulatory risk,” 2010). Regulatory risks may inherently benefit or impair businesses depending on the impact of the rules and regulations subject to change. These changes may affect a business financially or socially. Proper knowledge and defining appropriate procedures to abide by these rules and regulations will essentially reduce the risk of tort exposure. This proposed plan will help identify and manage regulatory risks associated with companies such as Alumina, Incorporated (Inc.) by designating preventive techniques, detection strategies, and corrective measures.

Alumina, Inc. is a virtual business simulation to guide students in the decision-making process that affect legal outcomes related to environmental protection and measures to enforce environmental regulations. On the brim of Lake Dira in Erehwon, Alumina, Alumina, Inc. is a company who produces packaging materials, bauxite mining, alumina refining, and aluminum smelting (University of Phoenix, 2002). Aluminum producing companies are generally known for the emission of polynuclear aromatic hydrocarbons (PAH), a potential carcinogenic effluent, into the environment. As a regulation, Alumina, Inc. must comply with the Clean Water Act, which allows no more than five milligrams of hydrocarbons per fluid liter. Five years prior, Alumina Inc. was in violation of the U.S. Environmental Protection Agency (EPA). During a routine evaluation, Lake Dira’s PAH levels were measuring above the standard norm.

The above example demonstrates an act of unintentional tort, also known as negligence. Under this doctrine, a person is liable for harm or injury resulting in a foreseeable consequence of his or her...