Plan for Recognizing and Minimizing Tort and Regulatory Risks
Plan for Minimizing and Managing Tort Liability
Arising out of Regulatory Risks
Regulatory risks are risks associated with the failure to comply with a whole host of governmental regulations. Such risks impact a company’s existing assets, earnings, and often, reputation. In the context of tort liability arising out of non-compliance of government regulations, it is in every company’s business interest to allocate resources to identify those risks, and to implement action plans to avoid such risks. In the event those risks do materialize, the company needs to have system in place to properly manage and contain monetary and reputational loss to the company. Additionally, companies will also benefit by anticipating what regulatory changes are upcoming so as to adjust the business practices accordingly, thereby minimizing the exposure to tort liability arising out of non-compliance of regulations. Given the fact that Alumina was cited by the government five years ago for discharging effluents with higher than permitted concentration of PAH, this paper will first focus on ways to identify risks of non-compliance with environmental regulations, followed by the various preventative, detective, and corrective measures to be taken at various stages of development of those risks.
A. Identifying risk of tort liability involving non-compliance of regulations: The starting point of identifying risks should be the known risks. In the scenario presented in the simulation, Alumina was cited for environment regulation violations five years ago. The company should review the various regulations involving effluents discharge, in terms of amount of discharge, and the chemical composition of the discharge. Alumina should also review any available industry standards. Often in grey areas where regulations do not specifically provide for a standard, there is an expectation that Alumina’s will meet industry standard. Failure to meet industry standard can
Arising out of Regulatory Risks
Regulatory risks are risks associated with the failure to comply with a whole host of governmental regulations. Such risks impact a company’s existing assets, earnings, and often, reputation. In the context of tort liability arising out of non-compliance of government regulations, it is in every company’s business interest to allocate resources to identify those risks, and to implement action plans to avoid such risks. In the event those risks do materialize, the company needs to have system in place to properly manage and contain monetary and reputational loss to the company. Additionally, companies will also benefit by anticipating what regulatory changes are upcoming so as to adjust the business practices accordingly, thereby minimizing the exposure to tort liability arising out of non-compliance of regulations. Given the fact that Alumina was cited by the government five years ago for discharging effluents with higher than permitted concentration of PAH, this paper will first focus on ways to identify risks of non-compliance with environmental regulations, followed by the various preventative, detective, and corrective measures to be taken at various stages of development of those risks.
A. Identifying risk of tort liability involving non-compliance of regulations: The starting point of identifying risks should be the known risks. In the scenario presented in the simulation, Alumina was cited for environment regulation violations five years ago. The company should review the various regulations involving effluents discharge, in terms of amount of discharge, and the chemical composition of the discharge. Alumina should also review any available industry standards. Often in grey areas where regulations do not specifically provide for a standard, there is an expectation that Alumina’s will meet industry standard. Failure to meet industry standard can