Free «Enterprise Risk Management» Essay Paper

Enterprise Risk Management

Roughly five years ago, an example that went against the EPA regulations was provided by the business regulation simulation. The company was Alumina Incorporated, which is a very good company, and when it realized that it had violated some rights in the past five years, the company fought to rectify the situation. The company’s commitment was to ensure that they perform at a higher standard.  Five years later, the simulation introduced a scenario where an accuser laid claims that the company had been negligent, and out of this negligence, her daughter continued to suffer from leukemia. The focus of this paper is to explore the latent tort risks that occurred in the Business Regulation simulation. The paper will also explore a tort infringement from the simulation. Further, the paper will also aim at applying the 7-step strategy, as highlighted in the Harb article, and discuss how it pertains to Alumina. It will explore the risk of having environmental damages that are likely to poison the water in the lakes and, thus, cause health problems. It is worth noting that the amount of lead that is allowed to be present in the water must be monitored and reported to the EPA to ensure that they companies stick to the guidelines. However, the increased traffic in Lake Dira has polycyclic pungent hydrocarbons, whose concentration is soaring.  

Intentional Torts

A tort is also known as a wrong doing or a torturous action. There are three major types of torts, which comprise strict liability, negligence, and intentional doing. To begin with, an intentional tort refers to the intentional act that causes injury to an individual. Intentional torts are also further divided into numerous types such as false imprisonment, assault, and battery. An offensive act or a threat of immediate hard is referred to as an assault (Calandro & Lane, 2006). An assault does not necessarily involve physical contact, since an individual may be charged with assault by threatening the other party with harm over the phone. Nonetheless, an assault cannot be classified when the assaulted or the threatened person does not believe that he or she is threatened through the spoken threat.

Battery refers to the unlawful and harmful physical contact by another person who causes harm to that person. If one batters the other party causing injury to him/her, the injury is a form of torture to that particular person. In most instances, people sustain injury through direct or indirect contact with another individual. Such action may include things like intentionally hitting a person using stone, shooting someone, hitting a person on the face, food poisoning among many more bodily ways of contact. False imprisonment refers to the deliberate imprisonment of an individual without prior consent or permission. Such actions include blocking someone in a room with barriers, threatening violently, false arrest, and restraining a person’s freedom. When a person locks another person in a house or a car intentionally, it is referred to as false imprisonment.

Negligence takes place when an individual injures the other because of another person’s actions. Careless conduct is another term that is appropriate when referring to negligence. For one to successfully file a negligence lawsuit, the plaintiff must show proof of careless conduct against the other party. Such proofs are based on numerous issues such as actual cause, proximity cause, injury, breached duty, and duty of care. Duty of care refers to the responsibility that people owe one other. One of tem is the duty to drive carefully, which ensures that safety of others is maintained and respected. One must accept the need of having responsibility for individual’s own actions. For instance, when a person leaves a tree stamp along the sidewalk and a jogger to trip and fall, such doing is likely to cause injury. Breached duty refers to the failure of abiding by the duty of care.

Finally, strict responsibility refers to the burden devoid of disregard. Things like crop dusting, storing explosives, and owning wild pets usually put people in the community at numerous risks and, thus, are among some of the dangerous acts. These damages are likely to cause injuries and damage. For instance, a person who owns a dog may take the appropriate precaution to ensure that the animal is safe, and the lives of other people are also protected. If a case arises when the animal escapes due to the negligence of the animal owner, the owner still remains responsible for the animal. In fact, all the damages that may occur because of the animal’s escape remain the owner’s responsibility (U.S. Department of Justice, 2008).  

Seven Step Process

The simulation from Legal Environment of Business gave the users numerous choices from which they could choose when determining the possible outcomes with regard to Alumina Inc situation. Strict liability is the torts that are violated by the firm. This is because, during that firm’s tenure, the company was negligent and violated EPA’s regulations that saw swift action being taken to rectify the situation (Birks, 1996).

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Tony Harb’s article entitled “7 Essential Elements of ERM and the Role of Internal Audit” illustrates seven essential elements for running a thriving enterprise risk management system. Though the Alumina’s act, which violated some regulations, was inadvertent, and the firm took the initiative to seek solution immediately, Harb’s seven elements are likely to assist the company in its operations. Harb (2008) affirms that a triumphant ERM system is likely to reduce corporate failures, lessen costly errors, and act as the most appropriate step in addressing managerial issues.

Since in the Alumina’s history, this was the only violation; it was avoidable to some extent through employing Harb’s first step, management commitment (Woods, 2007). For Alumina to run well its ERM, management commitment is an essential tool. Commitment begins at the top and allows the leadership of the firm to minimize risks from the inception of the program.

Through Harb’s second element, which is communication and consultation, the Alumina could have used this essential element to avoid violating EPA regulations. Communication and consultation was likely to assist in avoiding this unfortunate incident. Harb’s third element, which is the implementation of policies and procedures, it was the most appropriate approach to eliminate the risk and prevent the incidence. Additionally, Harb’s fourth element for a successful ERM, which is education and training, is essential to any firm or organization. This is a step that is necessary in running an honest organization. This fourth one is an element that the company may have neglected, thus, causing the incident (Lam, 2003).

According to Harb, fifth element of effectual and proficient framework is an essential element. Alumina could have used it as an imperative element of their ERM. It would have assisted in developing the ground for running a valuable program. This element also could have assisted in establishing a system of checks and balances within the organization. In Harb’s document, risk management is the sixth element. It is significant once the system is running. Risk management plays the role of ensuring accountability, since policies and procedures must be followed. Communication and training of employees must be consistent to help in the process of establishing accountability (Brownlee, 2008). Since it was the first time that Alumina violated the regulations, and it was not intentional, this element may have assisted in establishing where the breakdown occurred and what was required in rectifying the situation.

Ongoing monitoring and review is Harb’s final element. As long as the ERM system is installed and operational, there must be checks and balances in the system. This is a tool that helps in system reviews, self audits, and log maintenance. Alumina could have used this final element consistently to avoid the regrettable event.

In the past, Alumina Inc. has experienced issues with relation to environmental discharge norms. A local resident filed a law suit indicating that there was a contamination in the lake, and this came from the Alumina Inc. This resident alleged that the contamination in the lake caused health complications to her daughter. Yet, in the simulation, the council was unwilling to disclose the already posted information. A copy of compliance that was issued to Alumina Inc incorporated the response by Ginger, which showed that the company was within the guidelines of the Clean Water Act. After the release of the editorial, the paper indicated through comments that Alumina was becoming cynical. Ginger was committed to ensuring that the company exercised its mandate in prevention of water pollution. This is why Ginger called for an independent study. After the new study was done, Alumina was found to be within the regulations; nonetheless, the resident is still trailing reimbursement (Miller, 1992). To avoid leaking some of the company’s information, the council sought to release a part of the environmental audit report.

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Ginger recommended that Alumina Inc. should make public the information, since it would indicate that the company is within the guiding principles. Ginger further deliberated that the company should mediate with American Arbitration Association to settle the matter without going to court. The AAA will go through the evidence that was presented and make a decision on the way forward. The settlement would be treated with utmost secrecy. The company’s resolution to employ mediation would save time and costs for court. By disclosing the outcome of the study, Ginger thought this would convince the community that Alumina was acting within the law.

The purpose of guidelines is to assist companies in elimination of problems that may have occurred or are bound to happen. The EPA has standards that are aimed at ensuring that all companies are in line with the regulation and laws. However, Alumina was sued by an individual despite the fact that it followed all the regulations (U.S. Department of Justice, 2008). It is important that when filing a lawsuit, a person must present the case by ascertaining that the company acted against the guideline and link the injury to the company. The counsel for Alumina Inc. was instrumental in the provision of the way forward in dealing with the problem, and this helped the company to settle that matter.

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