Resource Management Process - Regulatory Management

Process Objectives

Minimise litigation Protect adequately against loss while minimizing costs Comply with regulatory requirements Improve environmental and safety conditions

Critical Success Factors (CSF’s)

    A.   Adequate insurance with appropriate coverage (2)
    B.   Awareness training to educate against violations (1,3)
    C.   Monitor and manage environmental changes (1,4)
    D.   Maintain safe, clean, well-organized facilities (1,3,4)
    C.   Minimise and control use of hazardous materials (4)
    E.   Adequate procedures regarding lawsuit handling (1)

Key Performance Indicators (KPI’s) Linked to CSF’s

• Insurance-related expenses vs prior years; amount of uncovered losses vs additional cost to cover (A)
• Worker complaints; relevant training hours per employee per year (B)
• Dollars spent monitoring environment (C)
• Days without loss -of -work injury; workers’ compensation claims rates; dollars and number of environmental fines (D)
• Measure of toxic products produced or used in production (E)
• Number of new lawsuits and lawsuits settled (by type)

Inputs

Strategic plan Independent research Regulatory experts

Regulatory laws and guidelines ·Historical litigation data

External regulatory environment Training curriculum

Activities

Outputs

Litigation reports Litigation projections / analyses

Regulatory projections / analyses Regulatory reports

Retention agreements

Systems

Budgeting Payable / disbursement

General ledger

Regulatory / legal databases

Classes of Transactions

Routine Insurance expense Premiums payable Legal/regulatory expenses

Non-Routine Lawsuit settlements Regulatory settlements

Accounting Estimates Loss reserves - litigation Loss reserves - regulatory

Risks Which Threaten Objectives

    A.   Regulatory violations resulting in losses (1,2,3,4)
    B.   Settlement expenses (1)
    C.   Insurance rate increases (2,4)
    D.   Negative publicity from environmental issues (1,4)
    E.   Company is not safety/environmentally-conscious (4)
    F.   Contingent liabilities exist but are not known (3,4)

Management Responses Linked to Risks

• Monitor exam reports for violations (A)
• Monitor number of new lawsuits and number settled; review total cost breakdown (indemnity, fees, etc.) (B)
• Monitor insurance rates and rate “market” (C)
• Track company response to issues; monitoring of competitors’ issues (D)
• Establish responsibility for monitoring adherence; establish/monitor relationships with regulators (E)
• Periodic reviews by experts as to conditions; monitor complaints, fines and claims (F)

Other Symptoms of Poor Performance

High or increasing average cost per case High outside counsel costs

Property acquisitions without environmental due diligence Lack of negotiated fees

Uncertainty as to total environmental costs

Performance Improvement Observations

Expert testimony / litigation assistance Alternative dispute resolution Law department review

Tax advice for pollution control investment Quality assessment / compliance audits Risk assessment diagnostic

Litigation management diagnostic Environmental due diligence Environmental benchmarking