Introduction

Regulatory risks are risks connected with the inability to adhere with an entire list of governmental policies. Such risks affect an organization’s current resources, revenues, and most of the time, credibility. In the issue of tort liability emerging out of failure to adhere to government policies, it is in each organization’s business interest to distribute resources to determine those risks, and to execute action schemes to prevent such risks. In the case those risks do happen, the organization has to possess a mechanism in place to appropriately handle and control financial deficits to the organization (Statsky, 2000). Also, organizations will also get and advantage by predicting what policy changes are emerging so as to adapt the business activities accordingly, therefore reducing the immersion to tort liability emerging out of failure to adhere to policies.

Business Simulation

The business simulation focused on Alumina; an organization with liabilities in the past that had action initiated against the organization five years ago. Alumina has present tort liabilities because of the past lawsuit and recent accusations that add up to the probable risks to the organization. The list of tort liabilities and regulatory risks include: Defamation, First Amendment, and Freedom of Information Act. These risks are the most evident when compared to Alumina’s present and past liabilities.

Public complaint is thrown to the organization stating that they are still causing pollution to the local water supply. Alumina was proven guilty five years ago in a different lawsuit. Since then the organization has implemented essential changes and are congruent with government policies. Alumina acknowledges that this complaint is immaterial and is defamation against the organization. Since the complaint is based in terrible performance in the past by the organization, public opinion will be a major motivator in resolving the problem. This liability could have been minimized significantly by Alumina by enabling public knowledge of government regulatory enhancements and adherence over the last five years.

Given the truth that Alumina was warned by the government five years earlier for releasing effluents with bigger than allowed level of PAH, this paper will initially concentrate on procedures to determine risks of failure to adhere with environmental policies, followed by the different preventive and corrective procedures to be done at different levels of development of those risks.

Regulatory Risks

In order to determine regulatory risks like tort liability one must first define what tort liability is. The three kinds of tort liability include negligence, intentional torts, and strict tort liability. The tort of negligence is one that most organizations are guilty of. This tort is done without desire, through negligent activities or through initiatives that are accomplished without initially considering the impacts (Sparrow, 2000). In order to accomplish this activity properly an organization must first take a thorough look at itself internally having specific attention to initiatives that on the first sight seem innocent, but when investigated thoroughly indicate an unintentional dilemma. 

Another usual tort is the intentional tort. The intentional tort entails defamation which implies a statement that is not valid and is done by an individual or group to another concerning a third party. Defamation is composed of either slander, which is verbal defamation or libel which is written defamation. The one aspect concerning defamation is in assistance of the media. The media has a valid right which implies that they cannot be cited with defamation for printing data that is not correct as long as there is no malice. 

The last tort is the strict liability tort. This tort is complete liability for action with limited, if any, defences available. This implies that the company or person has a responsibility of liability due to harm consequences. 

In order to properly handle regulatory risks an organization must first be knowledgeable of these kinds of torts and then study their functioning behaviors to guarantee that they are doing everything to make sure that they are not incurring mistakes regardless of whether they are deliberate or not.

Alumina Plan to Reduce Tort and Regulatory Risk

In order to prevent future situations as the one that Alumina got involved with, a plan must be created to identify and reduce tort and regulatory risk. 

Plan Goals

The best manner to approach to dislikeable case is to prevent the case itself. With that in perspective this plan have been established to determine probable regulatory risks, handle those risks by corrective procedures and establish a system that could properly prevent tort liabilities and regulatory risks (Glannon, 2005). In the situation that any unwanted case could break the system create a logical scheme to prevent any kind of law claim. The primary goals of this plan are: 1) determine Alumina processes that could lead as a tort to the community; 2) study environmental policies in the nations and/or communities where Aluminas’ manufacturing plants are; and 3) perform third party site surveys; and 4) being always one step ahead.

1)  Determining Possible Tort Risk

It is a truth that not prior to or either after the accident, Alumina have been connected to any intentional tort; but unwanted cases occur as the 1989 infraction indicated, and the incapability to deal appropriately with such accidents could result to law litigations. It is Alumina’s duty as a company to prevent any kind of negligence tort and, if so, to react properly with an organized system to reduce any negative effect. In the identification procedure we are suggesting a re-assessment of Alumina processes. 

2)  Study environmental policies

The initial part of determining risks should be the identified risks. In the case illustrated in the simulation, Alumina was warned for environment policy abuse five years earlier. The organization should assess the different policies involving effluents release, with regard to the level of discharge, and the chemical elements of the discharge. Alumina should also study any accessible industry standards.

3)  Perform third party site surveys

In order to disallow, or at least reduce, the damage to Alumina’s image, as well as potentially huge financial deficits, it is suggested that Alumina perform randomized, third party site surveys on a semi yearly basis to guarantee adherence with the whole EPA policies for release of effluent in the lake. Not only will this enable Alumina to meet any probable concerns of non adherence in an efficient way, it will also enable the organization to not be dependent upon the EPA to know when an inspection will be done (Woodman, 2008). This proactive process may also be utilized for the objectives of establishing goodwill within the society.

4)  Alumina must look  to stay one notch ahead of the regulating agencies.

The two best methods for pre-empting regulation change are to implement best practice before it is approved, and to manage consistent interactions with local and global regulating agencies. A proactive method of Alumina can aid prevent the need for regulation in the first place, and reduce the delay as a result of new policies where it emerges. With Alumina finding it hard to manage adherence with policies in various jurisdictions, hiring expertise in various nations’ regulatory settings is also viewed as an essential tactic. Direct lobbying of governments is seen as far less efficient as a plan for handling regulatory risk. 

After various large scale shortcomings in compliance within Alumina in the past years, few would debate with the necessity for powerful and effective regulation. But most leading companies are worried that recent policies have brought unwanted effects for business. They see that the primary regulatory risk is that, in the incapability to comprehend their businesses, the regulator does something that inflicts harm to them. That makes it all the more necessary that organizations like Alumina work closely with regulating agencies at the local and international setting, aiding them to establish guidelines for excellent compliance without the necessity for excessively onerous restrictions.

Conclusion

Regulatory risk and tort, two words pertaining to the issues emerging from new or current policies, is now one of the biggest threats to business. In the eyes of most companies, regulatory risk and tort is now a larger source of worry than country risk or terrorism and natural calamities. How did regulation, majority of which is created to lessen business risks, become a huge source of risk in its own right? Organizations like Alumina acknowledge the need for regulations to manage business, and are utilized to functioning within regulatory issues. But a number of new policies in the past few years have had significant, and some would say unexpected effects for business. For organizations like Alumina with global operations, specifically, the expenses and complications of guaranteeing adherence have emerged tremendously. So have the penalties of failing to comply.

REFERENCES

Glannon, J. (2005).  The Law Of Torts: Examples And Explanations (Examples & Explanations).  Aspen Publishers; 3rd edition

Sparrow, M. (2000). The Regulatory Craft: Controlling Risks, Solving Problems, and Managing

Compliance.  Brookings Institution Press

Statsky, W. (2000). Essentials of Torts.  Delmar Cengage Learning; 2nd edition

Woodman, G. (2008). Risk and the Law.  Routledge Cavendish; 1^st edition