Risk Management
The 4 Steps in Risk Management: 1.1. Risk Assessment (Information)- Risk assessment is the process of identification and evaluation of exposures that threaten a company’s assets and profitability. Combining legal and technical knowledge with common sense promotes good risk assessment. 1.2. Loss Control (Action)- Process of reducing the frequency and severity of losses through preventative measures 1.3. Risk Transferring (Action)- This is the process of shifting the financial burdens of losses outside the responsibility of the organization. The purpose of this action is to take a specific risk, which is detailed in the insurance contract, and pass it from one party who does not wish to have this risk to a party who is willing to take on the risk for a fee, or premium. 1.4. Risk Monitoring (Follow-up)- This is a process of continually assessing pre-existing and potential exposures that could threaten the organization. One thing to remember is that this is a proactive and ongoing action. 1. Establish an Indemnity Clause
An Indemnity clause is a written agreement between a business chain that requires one party, such as a supplier, to indemnify any losses to the business. Indemnity clauses are useful because if for any reason the organization is unsatisfied with any products it received, the business/corporation would receive an indemnity from the supplier, which usually becomes a reduction on price. So if a customer was unsatisfied with any products received, the supplier would have no choice but to give an indemnity for the products, not the selling party. 2. Establish an Exculpatory Clause
An exculpatory clause bars any Third Party member from suing the organization if they are injured due to their own negligence. What this does is dissipates the organization of any responsibility associated to the exculpatory clause. A common example is a parking lot ticket stub that states that the parking lot owner is not responsible for theft or damage to the vehicle. 3. Incorporate a Risk Management Team
The most important member of a RM Team is the Risk Manager. The Risk Manager is an overseer of the RM Process and helps enact indemnity and exculpatory clauses. It would be in a business’s favor to hire an attorney to make sure all indemnity and exculpatory clauses are rational in all circumstances. An Ethics Officer is needed to make sure all clauses are carried out fairly and ethically with the best interests of the organization and its stakeholders in mind. A Human Resources manager is also needed to handle all problems with internal employees such as compensation, proper hiring/firing, and training. 4. Open an Ethic’s Office
An Ethic’s Office is put in place to service all internal ethical matters that pose potential threats to the organization. An ethics office provides a safe, confidential place for employees to express their concerns about potential threats. It is also a place that welcomes whistle-blowers to express any concerns without revealing their identities. This is important because it allows the corporation/ business to
Alternative Dispute Resolution 1. Mediation
A neutral third party acts as a mediator between two parties in search of a resolution that equally satisfies both parties. The neutral third party member can be an attorney, or someone with extensive knowledge in the area of conflict. The mediator may make a decision, but it is nonbinding unless mandated by a judge, or otherwise stated in a formal contract. Some businesses love mediation because it brings a third-party to the settlement process, who can provide a disinterested reality check for both sides. If a settlement can be reached, both parties can save a significant amount of time and money.
Bryant Jones, 4:00 ,#9
2. Negotiation Both parties attempt to settle the dispute informally, and can choose whether or not to be represented by an attorney. No mediation presence is required and the parties have to come up with a resolution on their own. Typically both parties attempt to negotiate a settlement before entering into trial
3.Summary Jury Trials
When dealing with summary jury trials, both parties present their respective arguments and evidence to a jury. After the arguments are presented, the jury renders a verdict. This verdict is nonbinding and is one that will assist both parties during mandatory negotiations immediately following the hearing. 4. Arbitration
Arbitration most commonly arises where a contract between two parties has an arbitration clause, which typically provides that both parties to the contract agree to settle any disputes through arbitration rather than through the courts. Arbitration clauses also will provide whether the arbitrator's decision is binding, as well as other related provisions, such as the process for choosing who will arbitrate the dispute. In most cases the parties decide that the Arbitrator’s decision is legally binding, but both parties can agree upon nonbinding decisions. Arbitration resembles aspects of a traditional trial utilizing evidence and witnesses from both parties. A negative aspect of arbitration is the fact that appeals are usually unsuccessful because both parties participate in the selection of the arbitrator and are made aware of the terms before the conclusion of the verdict 5. Mini-Trial Mini-trials combine elements of both arbitration and mediation. Like arbitration, mini-trials involve the presentation of evidence to an impartial third-party. Like mediation, mini-trials are intended to enhance the settlement process. The impartial third-party may issue an opinion, but it is typically nonbinding, unless the parties agree otherwise beforehand.