Minimizing Tort

Recognizing and Minimizing Tort and Regulatory Risk Plan

University of Phoenix

LAW531: Business Law

Phillip Quintana

November 30, 2009

Recognizing and Minimizing Tort and Regulatory Risk Plan

Regulatory risks are risks associated with a change in laws or regulations that may have an impact upon a business, investment or security. These kinds of risk should be identified so that an action plan can be put into place to avoid potential risks, or combat the risks in the event the risk should come into existence. Risks can affect a company’s cash on hand, future earning potential and reputation therefore developing a plan to identify risks and deal with the risks accordingly is essential to all businesses. Recognizing regulatory risks is the first step to devising and implementing an action plan and managing risks through several ways including preventive, detective and corrective measures. Companies can safeguard against tort liability by recognizing regulatory changes and adhering to the new regulations set forth. For the purpose of this paper, Alumina, Inc. will be examined to identify potential regulatory risks and explore how to manage those risks using preventive, detective or corrective measures.

Alumina, Inc. is a $4bn aluminum maker that operates in eight countries around the world. Alumina does business in several markets including automotive components, packaging materials, bauxite mining, refining and melting. Alumina was reported to be in violation of environmental discharge norms in an EPA compliance evaluation inspection with PAH concentration levels in the test samples five years ago. The EPA ordered Alumina to fix the problem and Alumina complied, as noted on the environmental audit report, which reported corrected. Alumina failed to recognize the risks beforehand and the high PAH concentrations were cited for as out of compliance with the regulations administered by the EAP. The risks associated as non-compliant with environmental...