Risks are inherent to all business organizations. Risk management often considers several areas of practice and is an absolute necessity, not merely an option. The author will discuss regulatory risks for organizations, and explain how they can be identified and managed. Risk management requires considering and weighing risks and implementing procedures to monitor and moderate them.
Risk Identification
Overview Legislative and executive branches of the United States government have enacted laws that regulate all businesses. Thousands of administrative agencies are authorized by Congress to administer and enforce statutes by regulating businesses. Administrative agencies are typically given executive power to investigate and prosecute potential infringement of statutes, administrative rules, and administrative orders (Cheeseman, 2010).
Intentional Torts, Negligence, and Liability While no organization’s risks are identical to another’s, several can be identified and applied to organizations in general. There are three categories of “wrong:” intentional torts, unintentional torts, and strict liability.
Intentional tort. This category of “wrong” requires that intent was present when harm was caused. Examples of intentional torts are assault, battery, and false imprisonment. The law safeguards individuals from uninvited touching, restraint, and any other contact (Cheeseman, 2010).
Unintentional tort. Negligence is the “omission to do something which is a reasonable man would do, or doing something which a prudent and reasonable man would not do” (Cheeseman, 2010, p. 80).
The Business plan on Business And Society Affirmative Action
LEADERSHIP American business is in dire straits and the blame is being heaped on its leadership or, more aptly, the lack thereof. There are probably no fewer business leaders today than there were 50 years ago. There is not a shortage of good people, but maybe a lack of the right kind of people. People with the skills necessary to drive companies forward in a thoroughly different and rapidly ...
For a legitimate negligence lawsuit, several elements of negligence must be present: duty of care, reached duty, injury, act was the actual cause of injuries, and the negligent act was the legal cause of the injuries. Strict liability. Even if an individual was not negligent and had no intent, he can still be held legally liable for injuries caused by certain activities. Strict liability imposes legal responsibility for injuries sustained in the following: product liability, ultra-hazardous activities, animal care, and some statutory offenses (Butera, Beausang, Cohen, & Brennan, 2011).
Disclosure of Agency Actions
To prevent public perception of secrecy, Congress has allowed statutes to promote public disclosure of federal administrative agency actions, while at the same time protecting companies from overly public administrative agency actions. These statutes are the Freedom of Information Act, the Government in the Sunshine Act, the Equal Access to Justice Act, and the Privacy Act. Freedom of information act. This federal law allocates for full or limited disclosure of formerly unreleased information and documents. This law guarantee public access to government records and holds a presumption of disclosure.
However, there are nine exemptions of the act. Government in the sunshine act. This law allows closed or partially closed advisory committee meetings. Closed or partially closed to the public are discussions of classified information, reviews of proprietary data, and deliberations that consider personnel privacy. Equal Access to Justice Act. A party who is subject to an action of an unjustified administrative agency can sue to recover attorney’s costs and other fees (Cornell University Law School, n. d. ).
The Essay on Change Risk Faced By Multinational Companies
Exchange Rate Risk." Exchange rates are the amount of one country's currency needed to purchase one unit of another currency (Brealey 1999, p. 625) ." People wanting to exchange some money for their vacation trip will not be too much bothered with shifts if the exchange rates. However, for multinational companies, dealing with very large amounts of money in their transactions, the rise or fall of ...
Privacy Act. This act safe-keep records that ca be recovered from a system of records by personal identifiers like name or social security number. An individual can have access to his records and request correction if they are incomplete or inaccurate (Social Security Administration, 2011).
Risk Management The Industrial Revolution caused substantial environmental pollution of solid and toxic wastes into the land and water. Companies such as Alumina, Inc. , were not efficient in voluntary pollution control, so the government took on its regulation and control (Cheeseman, 2010).
Awareness of and compliance to these regulatory statutes may be the best risk management strategy available to companies who are at potential risk. Risk assessment and compliance are managed in together with one another. Compliance management includes three interrelated perspectives: preventive, detective, and corrective procedures. 80% of organizations report improvements from expanding their compliance regimens (BPM Forum, 2006).
Preventive The easiest, most fiscally sound, fastest way to solve a problem is to prevent the problem in the first place.
The best risk preventive practice for agencies such as Alumina, Inc is regulatory compliance. The government places a high level of importance on the preservation of the environment and has stringent means of enforcing compliance to environmental regulation. The best approach for achieving compliance, thus minimizing regulatory risk, is to have a preventative focus. Congress created the Environmental Protection Agency in 1970 as a rule-making agency to hold hearings, make decisions, and order remedies for violations of environmental laws. Air and water quality standards are established that regulate pollution rates.
If companies were compliant with enacted statutes at all times of business operations, such measures would prevent regulatory risks. Although Section 5 of the FTC Act prohibits unfair and deceptive practices, some companies are in violation. Part of preventive risk management, companies must avoid misleading or omitting information. Unsubstantiated claims and bait and switch tactics must be avoided as a preventive measure. Insurance, which is governed by the law of contracts, is designed for businesses to protect themselves against risk of loss.
The Business plan on Questar Company Risk Analysis
INTEROFFICE REPORT Questar Corporation: Energy Company October 6, 2004 Prepared for: S. E. Parks, Senior Vice President and Chief Financial Officer Prepared by: Cathy Caton, Accountant Three segments of Questar operations cover resources and regulated services. Follows is the risk assessment for Questar: Resources, Lack of internal control in estimating reserve (s) revenue, Financial analysis and ...
The law requires some companies to carry a minimum of $1 million of liability insurance, which will cover negligence, wrongful acts, and misconduct by the company (Cheeseman, 2010).
Liability insurance will guarantee injured third parties compensation. This measure is both preventive and corrective. Detective Compliance evaluation inspections and audits will not serve as a preventive measure; however serve to detect possible risks and is an “after-the-fact” approach. Compliance is defined as ensuring business procedures, operations, and practices are in concord with a given set of norms (Sadiq & Governatori, 2010).
Detective measures are based on reporting and conducting internal and external audits. Changing legislatures and compliance requirements make it difficult to detect. “The diversity, scale and complexity of compliance requirements warrant a highly systematic and well-grounded approach,” (Lu, Sadiq, & Governatori, 2008, p. 345).
Corrective Measures Organizations can raise several defenses as corrective measures against liability. While maintaining public image and damage control, defenses must be ethical in resolving potentially damaging lawsuits. Alternative Dispute Resolution.
Negotiation is a simple form of alternative dispute resolution, and includes only the parties involved in the dispute. Negotiation is resolved when the parties reach a voluntary resolution. Mediation is another popular form of alternative dispute resolution. It is available through individuals and organizations like the American Arbitration Association and some court systems. Alternative dispute resolution is an attractive way to resolve disputes because of its speed and the empowerment of the involved parties. Court litigation is slow, expensive, and has uncertain results.
Organizations can hold back sensitive business information from public dissemination. This will protect the disclosure of information that could hurt foreign policy or national defense, privacy of individuals, proprietary interests of business, functioning of the government, and other interests (HRSA, 2011).
Corrective measures vary from the initiation of a new regulation, to breech reporting, to the company coming under surveillance and scrutiny by a control authority. In the worst-case scenario, a company can undergo an enforceable undertaking (Lu, Sadiq, & Governatori, 2008).
Galvor Company Business Plan
Case 10-3: Galvor Company Background Galvor Company was founded in 1946 by owner, and president M. Georges Latour. The company had acted as a fabricator, buying parts and assembling them into high quality, moderate-cost electric and electronic measuring and test equipment. Latour had always been personally involved in every detail of the firm's operations as in most family businesses. Fiscal ...
The company will position itself favorably with regulators and other controlling authorities if corrective measures are undertaken with a proactive approach. Conclusion The states as well as the federal government administer and enforce laws related to safety. Companies are required to comply with the regulations and legal procedures of regulatory agencies just as much as they are required to follow federal laws. Managers must be aware of, and comply with federal and state laws that govern their business. Aligning business objectives with regulations and legislation will minimize tort and regulatory risks and improve business performance.
