Recognizing and Minimizing Tort and Regulatory Risk
Managing regulatory risks such as tort liability can be managed through preventative detective and corrective measures. The goal of this management plan is to prevent extensive losses, environmental and commercial, preserve the image of Alumina and abide by the important environmental statutes. The strategies include transferring the risk to another party, reducing the negative effect of the risk, and accepting some or all of the consequences of a particular risk. Risk mitigation needs to be approved by the appropriate level of management. For example, a risk concerning the image of the organization should have top management decision behind it whereas IT management would have the authority to decide on computer virus risks. Alumina will follow all of the planned methods for mitigating the effect of the risks. Purchase insurance policies for the risks that have been decided to be transferred to an insurer, avoid all risks that can be avoided without sacrificing Alumina’s goals, reduce others, and retain the rest. There isn’t any way other than to close to avoid the risk. So, an emergency action plan will be formulated to determine exactly how we will proceed during a crisis. The plan will have the same skeleton as an emergency exit plan for a theatre in the event of a fire. Everyone is calm and going in the direction. If risks are improperly assessed and prioritized, time can be wasted in dealing with risk of losses that are not likely to occur. Spending too much time assessing and managing unlikely risks can divert resources that could be used more profitably. Unlikely events do occur but if the risk is unlikely enough to occur it may be better to simply retain the risk and deal with the result if the loss does in fact occur. Prioritizing too highly the risk management processes could keep Alumina from ever completing a project or even getting started. This is especially true if other work is suspended...