Recognizing and Minimizing Tort and Regulatory Risk A tort is an act by a business that results in injury to a person, property, or good name. In most cases the person injured is entitled to compensation (Jennings, 2006). It is in the businesses best interest to be educated on local, state, and federal laws and regulations to reduce regulation and tort liability. A business must protect its assets, earnings, and good name. A company must have a plan in place to reduce and eliminate fines, penalties, and tort liability. The business must have a preventive plan in place to address regulation compliance and tort liability (Dore, 2008). Preventative, detective, and corrective measures The preventive plan should include measures to know and understand regulations and liability torts the business could encounter. Furthermore, the business plan should include steps that will be taken in the event of a government regulation violation or a tort liability. The plan should first identify the possible torts for non-compliance to government laws and regulations. The following are some of the issues the preventive plan should include: The business must identify health risks to employees, consumer, and the general public. The business must take solid steps to ensure the product, or services rendered is not harmful to others. An employee of the business needs to be assigned and responsible to understand the laws and regulations that affect all facets of the business. This person needs to keep management informed of new laws and regulations. The person is also responsible to train management and employees on federal, state, and local regulations. The person will also be responsible to have knowledge of environmental laws including Clean Air Act, Clean Water Act, Environmental Protection laws, Safe Drinking Water Act, and proper disposal of trash and waste (Dore, 2008).

Common business torts and measures to manage The following are some of the common tort liabilities in the Alumina Inc. scenario: negligence, strict liability, invasion of privacy, and punitive damages. Negligence.
Negligence is one of the most popular and most common grounds plaintiffs use against a business (Abraham, 2009). Negligence occurs when a business does not live up to a standard of conduct that an ordinary and reasonable business would (Jennings, 2006). Kelly Bates claims Alumina did not comply with the Environmental Protection Agency (EPA) legal limit of producing effluents. This caused the drinking water in Lake Dira to be unsafe, causing leukemia in her 10 year old daughter. The plaintiff has filed a million dollar personal injury lawsuit against Alumina to recover compensatory and punitive damages (Business Regulation Simulation, 2009). The complaint states Alumina effluents levels were above the limits set by the EPA today and five years ago. Five years ago, the EPA performed a routine test and determined Alumina was in violation of producing effluents above the legal limits. Alumina was ordered to clean up the water in the lake. An audit was performed after the clean up, and determined the problem was corrected. It is the plaintiff's responsibility to prove there is a link between the EPA violation and leukemia. Furthermore, it is the plaintiff's responsibility to prove Alumina is not presently in compliance with EPA standards. Because of the allegations, Alumina had an independent study performed that tested the water for compliance to EPA standards. The study determined the levels were within EPA limits (Business Regulation Simulation, 2009). The American Scientific Society performed a study of the water at Lake Dira and determined the polycyclic aromatic hydrocarbons (PAH) are 100 times greater than pre-urban conditions and pose a danger to animals and human life. The study determined the high PAH's is caused by increase traffic (Business Regulation Simulation, 2009). From the information sited above it appears the plaintiff has a weak case, however, every lawsuit should be handled very carefully. The company should take the following steps to manage a negligent lawsuit: hire a competent legal team to evaluate all the facts and minimize any possible litigation risks, consider a settlement through the mediation process, monitor legal expenses, and evaluate old and new environmental requirements to verify the company is in full compliance. Strict liability.
Even when a company does everything possible in developing and selling a product, and is not negligent, they can still be held liable under strict tort liability. Strict liability states a company's actions alone creates liability regardless of fault (Jennings, 2006). Alumna could be held responsible because car parts supplied by the company contributed to increased traffic, which caused unsafe drinking water (Levmore, 2009). Alumina can manage this risk by making sure it complies with industry standards. Alumina should try and transfer risk to company's who use their products. This is accomplished by obtaining sound legal counsel. Invasion of Privacy.
One option that Alumina could consider is to investigate the plaintiff. However, the company must consider the possibility that the plaintiff could claim an invasion of their privacy. Investigating the plaintiff is usually not a good idea unless Alumina believes the plaintiff's claim has an element of fraud. The investigation can't be performed by Alumina, only a license private investigator. If the plaintiff realizes they are being investigated it can create a poor public perception of Alumina . Alumina should have a policy of having investigations only in cases where fraud is suspected, and not in cases where punitive damages are likely (Baglione, 2008). Punitive damages. The lawsuit states Alumina is liable because of "repeated violations" of producing effluents above the EPA legal limits. There is no evidence of repeated violations. The investigation reports shows Alumina is in complete EPA compliance. The violation cited five years ago shows Alumina is open for liability (Melnitzer, 2009). Other common regulatory risks The Safe Drinking Water Act of 1986 provides the EPA to set standards and regulate drinking water. Oil Pollution Act (OPA) sets criminal liability for oil spills, Endangered Species Act (ESA) cuts down business activity if it brings harm to endangered animal species, Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) deals with hazardous waste site cleanups, and Resource Conservation Recovery Act (RCRA) regulates hazardous waste by issuing permits (Jennings, 2006). Measure to manage torts and regulatory risks The Clean Water Act and Safe Drinking Water Act are regulations that affect Alumna's industry. Alumina has in the past had violations with these regulations. Alumina needs to possess a thorough knowledge of the above regulations requirements. The company needs to have an Internal Control Checklist to verify compliance with regulation requirements, identify deficiencies, and provide corrective action. The company will test the water at regular intervals to verify compliance with EPA standards. The company will maintain documentation providing verification for all corrective actions taken. The company also will assign a person to obtain updated information on new water standards and regulations.

Conclusion In summary, Alumina has created a tort and regulatory risk plan. This plan will be used to prevent lawsuits, fines, and mentalities. The plan will also detect infractions and provide corrective measures. The plan will help manage the risks prior to any violations. The plan examines the possible risks and violations and provides corrective actions. The plan will protect the company's assets, earning, and good name.

References Abraham, K. (2009). Custom, Noncustomary Practice, and Negligence. Columbia Law Review, 109(7), 1784-1822. Retrieved on November 28, 2009 from EBSCOhost database. Baglione, S. (2008). Employee benefits and work conditions by demographic categories. _Journal _ of the Academy of Business & Economics, 8(3), 19-32. Retrieved on November 28, 2009 from EBSCOhost database. Business Regulation Simulation. (2009). Retrieved on November 28, 2009 from the University of Phoenix, Law/531 Web site: https://ecampus.phoenix.edu/secure/aapd/vendor Dore, S. (2008) Risk management basics. Office of Financial Management, State of Washington. Retrieved on November 28, 2009 from http://www.ofm.wa.gov/ Jennings, M. (2006). Business: its Legal, Ethical, and Global Environment (7th ed.). Stamford, Connecticut: Cengage Learning Levmore, S. (2009). Stipulated damages, super-strict liability, and mitigation in contract law. Michigan Law Review, 107(3), 1365-1379. Retrieved on November 28, 2009 from EBSCOhost database. Melnitzer, J. (2009). Punitive power. Inside Counsel. 20(212), 32-34. Retrieved on November 28, 2009 from EBSCOhost database.