Tuesday, November 3, 2009

The language of law

8:02 PM Posted by: Slamun Atlanta 0 comments

The law uses language similar to the language of risk management, but that language is interpreted in a different way. Understanding this difference is a key to unlocking controls that may reduce your residual risk. If you have ever picked up a legal textbook, talked to lawyers or been in court, you will have encountered language on the issue of risk that sounds vaguely familiar. There is an entire body of law, called ‘tort’, which sets out how much risk is acceptable and when you will be held liable if a risk materializes and causes damage to others. Tort law lays down that, in certain circumstances, you are deemed to owe a ‘duty of care’ to others. An employer’s duty to employees is an example. How much care you have to exercise is determined by an objective ‘standard of care’. If the standard of care you exercise is lower than a court would expect, and this contributes to someone sustaining a loss, then a court will hold you liable to pay compensation for the damage caused. Compensation for personal injury is the classic example.
In order to determine the standard of care, courts are meant to look at the ‘magnitude of the risk’. The greater the risk the greater the standard of care will be. An example will help you to understand this. Take a zoo. The standard of care required to guard against visitors being injured by animals will vary according to the threat posed by a given animal. If a visitor is attacked by a lion, serious injury or death is the likely result. On the other hand, an attack by a penguin is likely to result in the victim being more embarrassed than anything else. So the law requires that a higher standard of care be applied to lions than to penguins. So, if you think about it, this idea of setting a standard of care on the basis of the magnitude of the risk looks like part of an RM process, of establishing the ‘probability of an occurrence and possible consequences’. In setting this standard of care, the law takes into consideration the ‘costs of preventative measures’ and the ‘social value’ of the activity being engaged upon. Again, this is language on which you can place a meaning, as its sounds pretty much like ‘cost–benefit analysis’ and ‘defining your context’ or ‘setting strategic objectives’ in an RM process. [.............]

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