Assignment Help on Risk Management Principals
- From your own work experience, or if this is too limited, then from your knowledge and or reading and talking with friends and or colleagues, what do you consider to be the major frustrations that the law creates for someone trying to carry out their risk management functions?
Laws should always be honoured in every country and without honouring particular laws, one cannot live and work legally in countries like Australia. There are certain risk management laws that are important to understand and followed by chief risk officer or the whole enterprise regularly in any organization.
- Constitutional Law and State/Federal Relations
- Trade Practices / Fair Trading
- Environment and Occupational Health and Safety
- Employment and Industrial Relations
- Intellectual Property
- Taxation (State and Federal).
Laws are neutral for each and every entity of the country but in some situations, law bounds to the risk managers at the time when they are intended to violate laws for their own benefits. These laws are made for the benefits of employees, workers, suppliers, and consumers. So normally, laws stop these types of illegal risk management function like safety violation, sexual harassments etc, in the organization.
Law frustrates to the enterprises in a way that the cost of compliance, audit, information security and insurance is also very high. Currently carbon has been imposed on some entities so they have to pay the taxes. The standard “AS 3806” has been developed for the same purpose because it has defined the rules very clearly. Moreover, laws Regulatory Authorities take a lot of time to approve any risk management policy and no objection certificates (NOC’s) to the organizations so at that time laws also create frustrations for managers.
- Discuss and comment on the statement, “Risk management and legal compliance is one and the same thing”.
Risk management and legal compliance are interlinked with each other but they are not purely same. For example, if the organization is running its HR, IT, Finance department according to the prescribed laws then that is called legal compliance. It means that when the organization is obeying all the best practices and standards of the laws and conformity of laws by monitoring and reviewing forces then it is not called risk management. On the other hand, Risk management, is intrinsically a process of gathering pertinent information upon which the top management of an enterprise can develop considered judgments about strategic direction, investments, acquisitions, divestitures etc.
Risk management is the process of identifying potential hazards or weaknesses in the operating environments of companies contribute to the risk profile of an organisation and have negative effects on its capability to achieve business objectives, but these weaknesses are but one component of assessing risks. The major target of assessing controllable and non-controllable risk is to avoid those risks and achieve the desire results such as profits and so forth.
- In your view, will risk management and law always be in conflict because one is generally considered on an objective basis and the other on a subjective basis? Please discuss.
As it is already discussed, risk management is the process of removing potential risk that can harm to your business, objectives, investments, and future policies in a big way. To avail the facility of auditing and doing market penetrations are the steps for avoiding and removing risks management tools but these steps are provided in laws so risk management is not same as legal compliance.
In one special situation, risk can be associated with legal compliance and that is the situation when companies don’t break the laws related to Human resource management or safety rules because if they intend to break these types of specific laws then they are not managing the risk of heave penalties and fines by regulatory authorities. So the only ground in which the management of risk is complying with a legal requirement would be organised crime. Where else would the assessment of whether or not to break the law or be in conformity with conventional authoritarian requirements be considered an exercise in managing risks?
- Dolls-R-Us Pty Ltd entered into a contract with Make-A-Doll Pty Ltd in U.K., for the supply of 500 units of dolls. Before the order is shipped by Make-A-Doll Pty Ltd, the doll is declared to be unsafe. As a result of this, Dolls-R-Us Pty Ltd cancels the 500 units of dolls order. Make-A-Doll Pty Ltd approaches you for advice as it wishes to challenge the right of Dolls-R-Us Pty Ltd to cancel the contract. Please advise Make-A-Doll Pty Ltd on the various issues.
There are many specific conditions of the contract that has not been identified in this statement but generally some exceptions have been given to the buyer for cancellation without any breach, penalty and fine by law. These issues, exception and cancellation rights can be defined in the following ways due to mistake of fact or unfair contract:
- When there is a clause mentioned regarding this issue in which buyer can clearly cancel the contract if realize any future potential loss under the ‘Competition and Consumer Act 2011.
- When the order has not been filled then buyer can cancel that contract within 30 days from the signing of contract cancellation period.
- Cancellation should be communicated with proper notice within specified time period.
- Where seller has not disclosed the information regarding safety of dolls to buyer before or after the contract.
- Under section 24 of ‘Competition and Consumer Act 2011.
(1) A term of a consumer contract is unfair if:
(a) it would cause a significant imbalance in the parties’ rights and obligations arising under the contract; and
(b) it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and
(c) It would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.
If the contract doesn’t fall under these above conditions then seller can claim for real damages with proper proofs and documentations.
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