Risk and Tort Management
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RUNNING HEAD: TORT AND REGULATORY RISK
Recognizing and Minimizing Tort and Regulatory Risks Paper LAW 531/Business Law
02/22/2010
Introduction
In today’s business environment organizations have to deal with regulatory risks and tort liability on a daily basis. Organizations that do not comply with the state and federal regulations expose themselves to fines, tort liability and criminal penalties. The cost of failure to comply is not limited to fines and legal fees but also the loss of reputation and other tort liability. An organization must develop ways to prevent, detect, correct and manage risk and tort. Organizations that dedicate funds and resources to the management of these risks will reduce their exposure and avoid the costs of regulation violations and tort liability. A detailed plan to prevent, detect, correct and manage regulatory risks will guarantee the organization is pursuing best practices.
Prevention
The first step of a detailed plan is identifying and preventing regulatory risks. Preventing regulatory risks will ensure that an organization will not have to face fines, tort liability or criminal penalties. Hiring a legal team or advisor who is aware of the regulations will reduce risk by ensuring the organization adheres to the regulations. Once the risks are identified a compliance team should be formed. This team would regularly perform test measure to make sure all regulations are met.
The stringent testing by the compliance team would allow for the organization to avoid the common business tort of negligence. The tort of negligence occurs when the conduct of one party does not live up to a certain minimal standard of care (Jennings, 2006 pg 383). The minimum standard of care is often state or federal regulations. In the simulation involving Alumina Inc., the organization failed to meet the Environmental Protection Agency’s (EPA) safe level of PAH. A local resident Kelly Bates claims this negligent tort lead to her daughter...
Recognizing and Minimizing Tort and Regulatory Risks Paper LAW 531/Business Law
02/22/2010
Introduction
In today’s business environment organizations have to deal with regulatory risks and tort liability on a daily basis. Organizations that do not comply with the state and federal regulations expose themselves to fines, tort liability and criminal penalties. The cost of failure to comply is not limited to fines and legal fees but also the loss of reputation and other tort liability. An organization must develop ways to prevent, detect, correct and manage risk and tort. Organizations that dedicate funds and resources to the management of these risks will reduce their exposure and avoid the costs of regulation violations and tort liability. A detailed plan to prevent, detect, correct and manage regulatory risks will guarantee the organization is pursuing best practices.
Prevention
The first step of a detailed plan is identifying and preventing regulatory risks. Preventing regulatory risks will ensure that an organization will not have to face fines, tort liability or criminal penalties. Hiring a legal team or advisor who is aware of the regulations will reduce risk by ensuring the organization adheres to the regulations. Once the risks are identified a compliance team should be formed. This team would regularly perform test measure to make sure all regulations are met.
The stringent testing by the compliance team would allow for the organization to avoid the common business tort of negligence. The tort of negligence occurs when the conduct of one party does not live up to a certain minimal standard of care (Jennings, 2006 pg 383). The minimum standard of care is often state or federal regulations. In the simulation involving Alumina Inc., the organization failed to meet the Environmental Protection Agency’s (EPA) safe level of PAH. A local resident Kelly Bates claims this negligent tort lead to her daughter...