Minimizing Tort and Regulatory Risk Plan
Alumina, Inc is in the business of automotive parts, alumina refining and smelting. Alumina has to take into consideration compliance with Environmental Protection Agency Regulations. Five years ago, Alumina was found to be in violation of environmental discharge. The PAH concentration was above the allowed limit and EPA ordered Alumina to perform a clean up which Alumina complied with and corrected.
After this incident, Alumina did not put in place a well defined plan to identify measure and manage torts and regulatory risks. This lead to a tort liability when Kelly Bates claimed that Alumina is contaminating water and her daughter has developed ...view middle of the document...
It is costly to go after newspapers and hence it is better to prevent it.
Freedom of Information Act
At any time, any allegation against Alumina can lead to a request for documents related to the environmental discharge that Alumina was found in violation of. Alumina should consider this as risk and be ready to submit these documents with supporting documentation at any time. There is a risk of submitting business confidential information which could compromise the company’s market competency.
There is also a risk of employees being contacted to get information which could lead to leek of confidential information or incorrect information that can be held against Alumina.
Costly Litigation (Public Interest Advocacy)
It is risk to go into court to resolve issues. Even when it is guaranteed that the company is right and it will win the case, there is the risk of having some public interest organizations jump in and support the plaintiff in her case. This will lead to prolonged trial and increase in cost.
It can also lead to punitive damages, in case the trial goes really bad and the jury decides to make an example of Alumina in an effort to prevent other companies from following the same footsteps as Alumina.
Managing regulatory and tort risks is done through preventative, detection and corrective measures. Keeping compliance with the regulations is a continuous effort.
Clean Water Act
Alumina is using the latest technology to clean up and to keep compliant with the Clean Water Act. This is a preventative measure to avoid the environmental discharge that occurred before. Detection of this regulatory risk can be through an independent third party investigation done annually to make sure than there is no environmental discharge and the company is not contaminating water. Once the report indicates that there is an unacceptable level of contamination, then the company will have the time to react and correct the problem immediately before it becomes visible to the EPA regulators.
This liability can be reduced by keeping the public media and community aware of Alumina efforts to be compliant with the Clean Water Act. This preventative measure would keep the community and public media aware that Alumina is doing the right thing and hence raises confidence in Alumina. Alumina should take advantage of the self-policing incentives given by EPA to continually report to the public its monitoring efforts to keep the water clean. This...