Cera M. Spallone
December 10, 2012
Enterprise Risk Management
All businesses confront risk and evaluate the tasks as for management it is how to determine how much uncertainty to the business should accept or oppose. Enterprise risk management (ERM) in business includes procedures and approaches implemented by organizations to supervise risk and capture opportunities associated to the success of their intentions (1). This paper will acknowledge possible tort risks that result from the product liability video (4), and elaborate on the tort violations from the video, and apply the 7-step process as defined in the Harb article for risk management process, with the business risk associated with the violation (Harb, 2008).
Tort is explained as a wrongful act or damage done negligently or willfully. The circumstances involving tort can be express warranty, strict liability, breaching of contracts that can bring about a civil suit (Cheeseman, 2010). In the product liability video Quick Takes Video company purchases an editing software from Non-Linear Pro under the expressed warranty that their product would only cost “two” days of turn-around time, and a more efficient product. Non-Linear Pro sales department had misrepresented their product, omitting information in regards to videos needing digitizing before the editing system could be used, raises questions to intentional misrepresentation. Due to a series of dissatisfactions in the product, Quick Take Video has many potential risks that are taken against Non-Linear Pro. Their product slows production over their competitor, sales may even know this and they have misrepresented the product to continue their market share, the product itself has been cause for physical injury to end users, therefore it cannot sustain is contract duties. In order for Quick Takes Video to rescind their contract with Non-Linear Pro, (rescind is an action to (undo) the contract. Rescission is available if there has been a material breach of contract, fraud, and duress. In Quick Takes Video’s situation the contract with Non-Linear Pro is still within the right to look over goods “phase” or “products” and classifies itself as breach of contract for fraud, as it was misrepresented by the sale taking more than “two days”. Quick Takes Video has also lost employee time, pay defined under duress, , and personal injury to an employee.
There are many enterprise risk management frameworks available, many describe several approaches to analyze, identify, respond to, and monitor risks and opportunities, within the internal and external business environment. However, this paper will primarily only use the 7-essential elements of ERM and the role of internal audit. Implementing these techniques will allow a business to manage any potential tort issues and resolve any potential civil suit cases.
Communicate and reinforce with risk management, compliance, and internal audit. Having a clear definition to the organizations internal audit charter makes a clearer structure for communication. Risk managers are not always the subject matter experts and they need the risk owner therefore communication is a key element. Policies and procedures should be clear, concise, and easy to understand. Internal auditors can help to align the business plan to Risk management plan where possible and audit the systems and processes to ensure ERM framework is working. Training and education can assist in on the job risk aversion, and empowers employees trust with in the business as an investment to the organization. Internal Audit can assist in training to review risk profiles and provide feed where needed for…