Solved by verified expert :SUBJECT NOTES & STUDY
GUIDE
for
RISK MANAGEMENT PRINCIPLES
SWINBURNE CODE: HES6721
RISK MANAGEMENT PROGRAMS
SWINBURNE UNIVERSITY OF
TECHNOLOGY
Damien Smith and Derek
Viner
2013 Semester 1
Version
2013 Sem 1
Swinburne
University of Technology
Printed
4/03/2013
Faculty
of Engineering & Industrial Science
HES
6721 Risk Management Principles
Table of Contents
1
SUBJECT INFORMATION ……………………………………………………………………………………………………………..
4
1.1
INTRODUCTION……………………………………………………………………………………………………………………………
4
2 TOPIC 1 MANAGERIAL LAW
………………………………………………………………………………………………………..
5
2.1
WHAT IS MANAGERIAL LAW?
………………………………………………………………………………………………………..
5
2.2
IDENTIFIED DRIVERS OF MANAGING LEGAL RISKS
…………………………………………………………………………….
6
2.3
WHAT ENVIRONMENTAL FORCES EXIST?
…………………………………………………………………………………………
7
3
TOPIC 2 – CONTRACT……………………………………………………………………………………………………………………
8
3.1
COMMERCIAL CONTRACTUAL RELATIONSHIPS
…………………………………………………………………………………
8
3.2
INTENT TO CREATE LEGAL RELATIONS
………………………………………………………………………………………….
10
3.3
CONTRACT TERMS AND CONDITIONS
…………………………………………………………………………………………….
10
3.4
PERFORMANCE CRITERIA…………………………………………………………………………………………………………….
11
3.5
EFFECTIVE CONTRACT DOCUMENTATION
………………………………………………………………………………………
11
3.6
WHAT ARE THE RULES
FOR THE INTERPRETATION OF CONTRACTS?
………………………………………………….
12
3.7
WHAT MAKES A SUCCESSFUL CONTRACT? …………………………………………………………………………………….
13
3.8
DISTINCTION BETWEEN REPRESENTATIONS AND TERMS OF CONTRACT ………………………………………………
13
3.9
COLLATERAL CONTRACTS
…………………………………………………………………………………………………………..
13
3.10
CONDITIONS AND WARRANTIES
…………………………………………………………………………………………………..
13
3.11
IMPLIED TERMS
…………………………………………………………………………………………………………………………
14
3.12
UNCONSCIONABLE CONTRACTS……………………………………………………………………………………………………
14
3.13
EXCLUSION CLAUSES………………………………………………………………………………………………………………….
14
3.14
CHECKLIST –CONTRACT
COMPLIANCE
………………………………………………………………………………………….
15
4
TOPIC 3 NEGLIGENCE……………………………………………………………………………………………………………….
16
4.1
NEGLIGENCE
…………………………………………………………………………………………………………………………….
16
4.2
DUTY OF CARE
………………………………………………………………………………………………………………………….
16
4.3
BREACH OF DUTY OF CARE
………………………………………………………………………………………………………….
17
4.4
EXCLUSION CLAUSES OR DISCLAIMERS
…………………………………………………………………………………………
18
4.5
VICARIOUS LIABILITY…………………………………………………………………………………………………………………
18
5
TOPIC 4 EMPLOYMENT……………………………………………………………………………………………………………..
19
5.1
EQUAL OPPORTUNITY LEGISLATION
……………………………………………………………………………………………..
19
5.2
SEXUAL HARASSMENT………………………………………………………………………………………………………………..
20
5.3
TERMINATIONS………………………………………………………………………………………………………………………….
20
5.4
OUTSOURCING…………………………………………………………………………………………………………………………..
23
5.5
EMPLOYMENT CONTRACT
…………………………………………………………………………………………………………..
24
5.6
EMPLOYMENT LAW VS INDUSTRIAL RELATIONS
……………………………………………………………………………..
24
5.7
THE NATIONAL WORKPLACE RELATIONS SYSTEM……………………………………………………………………………
26
5.8
COMMON LAW CONTRACTS OF EMPLOYMENT
………………………………………………………………………………..
27
5.9
CHECKLIST OF APPLICABLE LAW TO EMPLOYMENT CONTRACT …………………………………………………………
27
5.10
FIDUCIARY DUTIES IN THE EMPLOYMENT CONTRACT
………………………………………………………………………
28
5.11
THE IMPLIED DUTY OF FIDELITY AND GOOD FAITH IN THE
EMPLOYMENT CONTRACT
……………………………
28
5.12
FRAUD……………………………………………………………………………………………………………………………………..
28
5.13
HOW POTENTIAL AREAS OF FRAUD SHOULD BE ADDRESSED ……………………………………………………………..
29
5.14
OCCUPATIONAL HEALTH AND SAFETY…………………………………………………………………………………………..
29
6
TOPIC 5 COMPETITION AND CONSUMER ACT……………………………………………………………………….
33
6.1
THE LEGISLATION
……………………………………………………………………………………………………………………..
33
6.2
PENALTIES………………………………………………………………………………………………………………………………..
36
6.3
SELLING –ADVERTISEMENTS VS
REPRESENTATIONS
……………………………………………………………………….
37
6.4
LESSENING OF COMPETITION
……………………………………………………………………………………………………….
38
6.5
AUTHORISATIONS………………………………………………………………………………………………………………………
39
6.6
MISUSE OF MARKET POWER…………………………………………………………………………………………………………
39
Version
2013 Sem 1
Swinburne University of Technology
Page 2 of 70
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4/03/2013
Faculty
of Engineering & Industrial Sciences
HES
6721 Risk Management Principles
6.7
PRICE FIXING
…………………………………………………………………………………………………………………………….
40
6.8
EXCLUSIVE
DEALING
………………………………………………………………………………………………………………….
40
6.9
SILENCE
…………………………………………………………………………………………………………………………………..
41
6.10
PRODUCT SAFETY
AND PRODUCT INFORMATION……………………………………………………………………………..
41
6.11
VOLUNTARY
RECALL PROCEDURE………………………………………………………………………………………………..
42
7
TOPIC 6 LEGAL COMPLIANCE PROGRAM………………………………………………………………………………
43
7.1
RISK MANAGEMENT
AND LEGAL COMPLIANCE PROCESSES
……………………………………………………………….
43
7.2
COMMITMENT AND
EMBEDDING…………………………………………………………………………………………………..
43
7.3
LEGAL
COMPLIANCE…………………………………………………………………………………………………………………..
43
7.4
ENTERPRISE CARE
PRINCIPLES TO GUIDE LEGAL AUDIT
……………………………………………………………………
44
7.5
EXPOSURE
………………………………………………………………………………………………………………………………..
45
7.6
GROWTH OF
UNCERTAINTIES……………………………………………………………………………………………………….
45
7.7
THE ‘INTENSE SCRUTINY’FACTOR
……………………………………………………………………………………………….
45
7.8
SELF REGULATION……………………………………………………………………………………………………………………..
46
7.9
TRAINING
COVERAGE
…………………………………………………………………………………………………………………
46
7.10
COMPLIANCE
SUPPORT
……………………………………………………………………………………………………………….
47
7.11
SUMMARY
………………………………………………………………………………………………………………………………..
47
8
TOPIC 7: RISK MANAGEMENT THEORY AND
PRACTICE………………………………………………………
48
8.1
INTRODUCTION………………………………………………………………………………………………………………………….
48
8.2
LEARNING
OBJECTIVES AND RESOURCES
……………………………………………………………………………………….
48
8.3
AN INTRODUCTION
TO THE RISK MANAGEMENT PROCESS…………………………………………………………………
48
8.3.1
The conceptual base
………………………………………………………………………………………………………………
48
8.3.2
Safety and productivity…………………………………………………………………………………………………………..
50
8.3.3 Attributes of a risk management system ……………………………………………………………………………………
52
8.4
ORGANISATIONAL
STYLE AND THE QUALITIES OF A MANAGED RISK
………………………………………………….
53
8.5
WHAT PROMOTES
RISK MANAGEMENT IN AN ORGANISATION?
………………………………………………………….
54
8.6
WHAT WORKS
AGAINST RISK MANAGEMENT IN AN ORGANISATION?………………………………………………….
55
8.7
AWAY FORWARD
………………………………………………………………………………………………………………………
56
8.8
THE EXTENDED GENERALISED TIME SEQUENCE MODEL
…………………………………………………………………
56
8.8.1
Introduction
………………………………………………………………………………………………………………………….
56
8.8.2
Risk Identification …………………………………………………………………………………………………………………
57
8.8.3
Valuing Assets ………………………………………………………………………………………………………………………
57
8.8.4
Liabilities …………………………………………………………………………………………………………………………….
59
8.8.5
Estimation of Risk
…………………………………………………………………………………………………………………
60
8.8.6 Decision-making (evaluation of risk
control measures)
………………………………………………………………
61
8.8.7 Contingency planning and crisis management…………………………………………………………………………..
61
8.9
VIEWS ON SAFETY
AND RISK MANAGEMENT…………………………………………………………………………………..
63
8.9.1 The need for specific risk control
measures
………………………………………………………………………………
63
8.9.2 Where are the failings? ………………………………………………………………………………………………………….
63
8.9.3
“Resilience engineering”
……………………………………………………………………………………………………….
65
8.9.4
Specifying work methods
………………………………………………………………………………………………………..
66
8.9.5
Summary………………………………………………………………………………………………………………………………
67
8.10
RISK AND SAFETY MANAGEMENT SYSTEMS
………………………………………………………………………………….
68
8.10.1
Introduction
……………………………………………………………………………………………………………………..
68
8.10.2
An introduction to risk
management systems …………………………………………………………………………
68
8.11
SUMMARY OF THIS TOPIC
……………………………………………………………………………………………………………
70
Version
2013 Sem 1
Swinburne
University of Technology
Page 3 of 70
Printed
4/03/2013
Faculty
of Engineering & Industrial Sciences
HES
6721 Risk Management Principles
1 Subject Information
1.1 Introduction
This
unit provides an introduction to the legal origins of liability in an
organisation and to the theory of the management of risk. The subject HES6724
Risk Management Systems provides an opportunity to study the practice of risk
management in greater detail.
Topics
1 to 6 have been compiled by Damien Smith LLB, B.Com, FAICD, FAIM, CAHRI, FCIS.
Damien is a practicing lawyer, holds various directorships, has authored
numerous books including “Breakthrough and Achieve with Governance Intelligence®”;
developed unique governance SaaS tool -“governABILITY™”; and is Managing
Director of a successful consulting company Enterprise Care Pty Ltd.
Topic
7 has been compiled by Professor Derek Viner of Swinburne’s Faculty of
Engineering and Industrial Sciences. Derek has over thirty years of industrial
and academic experience in the technical and management aspect of risk.
Version
2013 Sem 1
Swinburne
University of Technology
Page 4 of 70
Printed
4/03/2013
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of Engineering & Industrial Sciences
HES
6721 Risk Management Principles
2 TOPIC 1 Managerial Law
2.1
What is managerial law?
Managerial
law is descriptive of those laws, many of which impact on enterprises and
management of those enterprises as they go about their day to day operations
and decision making.
Often
it can be surprising just how many laws there are which we need to be aware of
including:
ñ Constitutional
Law and State / Federal Relations
ñ Negligence
/ Duty of Care
ñ Trade
Practices / Fair Trading and Consumer legislation
ñ Contract
ñ Environment
and Occupational Health and Safety
ñ Employment
and Industrial Relations
ñ Intellectual
Property
ñ Taxation
(State and Federal).
The
above is by no means exhaustive, yet any one may constitute a considerable
impact on the decision making (or at least one expects this to be so) of any
enterprise and its managers.
Every
law needs to be understood at least from the position of how it may influence a
decision of a manager, a person carrying out their role and duties on behalf of
the enterprise; and hence the impact it has on and within the enterprise.
Hence a professional manager is one who
understands their working environment which includes the impact of law. The
professional manager has a working knowledge of each of the relevant managerial
laws and a sound understanding of their fit within the decision making
processes of both the role as manager and the enterprise as an operating unit.
Managerial
law manifests itself in matters of:
ñ compliance
ñ sign-offs
ñ policies
ñ accountabilities
ñ training
and awareness sessions
ñ audits
ñ specific
roles established within an enterprise.
The
success of any professional manager and indeed the enterprise itself will
depend upon the understanding and adoption of professional practices in the
area of managerial law.
The trend towards
having an integrated risk management program reflects that risk management is
part of an overall organisational management activity of which legal compliance
is simply an important part.
Version
2013 Sem 1
Swinburne
University of Technology
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HES
6721 Risk Management Principles
Standards
Australia states in its Standard for Compliance program AS 3806:
“However,
like other areas of risk management, legal compliance has its own
characteristics and needs to be considered in the light of applicable
legislation and the high standards for due diligence set by the courts. If
these standards are not met, major operational problems can result. This means
that, to an extent, legal compliance cannot always be handled under the same
principles as can be applied to other areas of risk management. The court’s
requirements for ‘due diligence’ defences have been set at a very high level,
and reducing the standard of the precautions taken, for any reason, can easily
lead to a complete loss of defence, leaving company directors and managers
exposed. Standard AS 3806 indicates the methods found most satisfactory in
securing proper management of legal risks.”
The
purpose of this Standard is to provide a framework for an effective compliance
program, the performance of which can be monitored and assessed. A compliance
program can be an important element in any corporate governance program as well
as any due diligence of an organisation, and should:
a)
aim to prevent, and where necessary,
identify and respond to, breaches of laws,
b)
regulations, codes or organisational
standards occurring in the organisation;
c)
promote a culture of compliance within
the organisation; and
d)
assist the organisation in remaining or
becoming a good corporate citizen.
2.2
Identified drivers of managing legal risks
Managerial
Law intends to highlight for enterprises all aspects of regulation and law as
it impacts on organisational development, operations and leadership.
Organisations and their leaders recognise that they operate in an increasingly
complex world of ever increasing regulations that now for many stretch across
national and international boundaries.
Managerial
Law seeks to acknowledge the dynamics of that environment and provide a
platform for our development of a more mature approach to management of both
the law and our operational practices. This is to be approached by taking into
account:-
1.
Organisation wide perspective of risk
and its oversight.
2.
Compliance is
acknowledged as being more then rules as it is integrated into the culture of
the company.
3.
Adoption of consistent policies and
processes is crucial for sound compliance.
4.
The view of the
organisation includes all stakeholders as part of the wider understanding of
the enterprise operating environment.
5.
Technology as a key tool to assist
enterprises in their management of this area.
6. In
certain cases the outsourcing of part of the compliance monitoring means there
is a greater objectivity and discipline applied.
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2013 Sem 1
Swinburne
University of Technology
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6721 Risk Management Principles
2.3 What
environmental forces exist?
On an
ENTERPRISE WIDE basis:-
Legal entity
itself
Corporate veil
From
the basis of LAW:-
Common law
Legislation
Equity
Common law
State
Commonwealth
International
Matters that involve PEOPLE:-Capitalism
and workers
Enterprise
or workplace style agreements Master / servant relationships
Team based
operations
Individual
accountabilities and performance management systems Independent Contractors
Virtual
Organisations – working from home
Partnering
/ Alliances – new approach to contracting relationships Joint Venture
Activities
