The business regulation simulation presented involves Alumina Inc., a United States based aluminum manufacturing corporation located on the fringes of Lake Dira. Alumina was discovered to be in violation of environmental discharge norms following a routine EPA compliance evaluation inspection five years ago. The company subsequently corrected this violation and has since enjoyed a good overall environmental compliance record. This paper will identify potential tort risks resulting from this violation and utilize the seven-step Harb process to mitigate associated business risks.
Alumina Inc. is considered one of the largest aluminum makers in the ...view middle of the document...
Public relations can work to repair Alumina’s image. Alumina has a right to privacy, especially because the first incident happened five years ago and was corrected with no further incidents. Furthermore, Alumina is protected and sensitive data is not released to the public. Alumina is still open for business and their credibility is still intact. Bates, however, is still pushing forward and has filed a multimillion dollar lawsuit against Alumina stating her daughter's leukemia is a direct result of the PAH violation five years prior.
With a liability tort in the balances, senior management should seek mediation for damages towards the Bates' family through the American Arbitration Association. By using a mediation tactic, press will be minimal and damages will be assessed and a resolution can be privately dispersed to the family. Mediation saved Alumina a large amount of money and prevented negative publicity. Bates was also forced to sign a release to drop all claims against Alumina and keep the litigation private and confidential from here on out. All-in-all, it became a win-win situation for Bates and Alumina and resulted in less legal fees and future torts are minimal and easily resolved if any should arise.
Tony Harb (2008) provides a seven-step method to ensure successful enterprise risk management (ERM). ERM is defined as “a structured, consistent, and continuous process across the whole organization for identifying, assessing, deciding on responses to, and reporting on opportunities and threats that affect the achievement of objectives” (Harb, 2008). Harb’s first step is management commitment to ERM. Effective risk management starts at the top and the management at Alumina must commit to developing and maintaining an ERM process. Promoting the benefits of risk management and integrating can be very beneficial to Alumina as a first step in mitigating and minimizing risks of this environmental violation.
Step two of the Harb process is communication and consulting of the ERM framework. Ongoing internal communication of the benefits of ERM and internal auditing will ensure management compliance. The use of reporting and KPI’s will build confidence and commitment. Alumina’s consultation with legal counsel and environmental consultants is essential to establish an ERM process and mitigate potential risks. Communication with government agencies, such as the EPA, and the community is also important in the development of relationships and expectations.
Step three in the Harb process is the development of clear and concise ERM policies and procedures. This will not only dictate the risk management policy but also communicate and coordinate the ERM plans and strategies within the Alumina organization. Regular review of policies and procedures will assist in determining appropriateness and effectiveness as well as aligning policies with actual risk. By developing a clear strategy...