The Business Regulation Simulation
Alumina suffered an embarrassing blow 5 years prior for violating “Environment Discharge Norms”. After their awful EPA compliance inspection they made a conscious effort to avoid this type of negative attention. It was all over the media which did not make Roger Lloyd a happy chairman. Since then however, the company has had remarkable compliance inspections. The major issues presented in the simulation are the Erehwon Reporter reporting and re-airing their bad EPA violation years back, Kelly Bates claiming that her son’s Leukemia was caused by water the company contaminated, EPA notifying Alumina that disclosure of information under FOIA is being considered (allowing release of the environmental audit report), and finally the lawsuit from Bates.
Kelly Bates suing is negligence tort.
The Erehwon reporting false reports is slander tort. At first choice during the simulation, the release “clean record” news story was chosen. This led to negative backlash from Erehwon, stating that Alumina had “skeletons”. Alumina reacted by sending a demand letter to the newspaper that then published a retraction. This allowed Alumina to breathe easier without another bad news story. After, the selection to conduct an independent site study was chosen. The study reported that PAH was lower than the prescribed level which also countered Bates’ accusation. Allowing the release of the entire audit report can lead to privacy tort. Alumina sought mediation from AAA in resolving the dispute.
Using Harb’s article to apply the risk management process to mitigate the business risk associated with the violation, I would use the tort violation of Kelly Bates suing for negligence. Element 1 would be to research and figure out if there really is an issue at the ground level. This should be done at any relative expense to the company and publish those efforts for the media to relish in, positive attention. Element 2 would be to initiate communication of this through all departments one on one. Element 3 would be to make sure all policies and procedures are where everyone including risk management understands the company’s position, policies, and aggressive need for positive media. Element 4 would be to invest in people and the work force so that everyone is up to speed with regulations and training that would avoid another bad EPA report. Element 5 would be to implement a plan that easy to folly and approach. Element 6 is where we would then look at the risks that we currently have and be proactive for a resolution before anyone else brings attention to it outside of the organization. And finally, Element 7 would make sure that all of the above elements are a regular process in Alumina’s daily organizational structure. Covering the above with Alumina management will ensure that they are aware of risks.
In the simulation, I decided not to follow council when he suggested that they take Kelly Bates to court. I believe that going with mediation was the best idea. Roger Lloyd main goal is to salvage the on the up reputation of Alumina. A nasty law suit made public by Bates would certainly counter act all of their hard work. However, I did agree with Arthur when he suggested releasing only parts of the environmental audit report. Confidential information can end up compromising their position as a competitive aluminum company.
References
Cheeseman, H. R. (2010). Business Law. Legal Environment, Online Commerce, Business Ethics, and International Issues (7th ed.). Upper Saddle River, New Jersey: Prentice Hall Publishing.
Legal Environment of Business - Business Regulation. (n.d.). Retrieved from https://ecampus.phoenix.edu/secure/aapd/vendors/tata/sims/legal/legal_simulation.html
