Dreamworld Accident Analysis & Corporate Response

This assignment analyzes the fatal accident at Dreamworld theme park, examining the company's response, policies, and adherence to safety regulations. It delves into the legal implications, public perception, and best practices for handling such crises. The analysis considers various sources like news articles, academic texts on corporate law and risk management, and ASX corporate governance guidelines.

Running head: RISK MANAGEMENT
Risk Management
Name of the student
Name of the university
Author note

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RISK MANAGEMENT
a)
It is the said duty of the board of directors involved in the all the Listed companies to
identify risk and take proper measure to deal with them, says ‘Principle 7 of the Australian
Security and Investment Commission’1. If the stringent measures are not taken when required,
the company and its Stockholders, creditors, consumers and even the society might suffer from
adversity.2 It is so recommended by the ASIC (Australian Security and Investment Commission)
that all the listed organization’s board should have a separate committee with the sole purpose of
Risk Management in mind3. It is further stated that the committee must have at least three
directors controlling its proceedings. Not only that, but, the Principal 7 also makes it very clear
the the risk management has to be revised by the board of the company or at least, the committee
at least once a year with the safety of the company in mind insuring that the process of review is
kept at full disclosure to enable proper accountability. It is the said duty of the organization to
not only reveal the internal audit of the entity with accordance to the structural role but also the
full disclosure of its part in any social, environmental and economic risks and state how these
risks are to be managed in the near future. In similar circumstances, it was seen that the
company, Ardent Leisure Ltd (Ardent) suffered substantial financial harm in relation to the
Dreamworld leisure Park, property of the Queensland Gold Coast4. This occurred due to
technical failures in the particular ride which then lead to the unexpected death of a few patrons.
Though accidents can never be foreseen and are beyond the control of man, they can be avoided
when taken certain measures which may not stop them, but are sure to minimize the chances of
1 Harris, J. Hargovan, A. Adams, M., Australian Corporate Law LexisNexis Butterworths 5th edition, 2015
2 Council, ASX Corporate Governance, and A. S. Exchange. "Corporate governance principles and
recommendations . ASX Corporate Governance Council." (2014).
3 Austin R.P. & Ramsay, I., Ford's Principles of Corporations Law, Butterworths, Australia, 16th edition,
2014.
4 Baxt, R., and Fletcher, K.L., Fridman, S., Corporations and Associations Cases and Materials on,
Butterworths, Australia, 10th edition, 2008

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them happening any time soon. In this particular incident, it was further seen that Queensland
Gold Coast had taken little to no precautionary measures and was criticized for not being able to
do proper risk management in the first place. The owner is held liable to undertake full
responsibility done to anyone who was harmed due to any certain instances related to the place
whatsoever5. So, in this case as well, it was the company to be blamed. If the risk management
measures were taken beforehand, the said company might have had avoided the accident to begin
with. Even if the accident might have taken place after taking the said precautionary measures, it
can very well be stated that the damage might have been comparatively lesser. Thus, this case
can be seen as prime example of how the society is at constant harm if a company fails to make
proper Risk Management schemes so as to minimize the occurrence of any further accidents
which lead to mass harm and civilian casualties.
b)
The Principal 7 of ‘Good Corporate Governance Recommendations’ imposes an
obligation on the listed companies to identify and manage risk according to a proper set of
Management frameworks with respect to the provisions mentioned in the former section of this
assignment.6 As mentioned before, the principle further highlights the organizing of more
committees within the Company who will deal with any risk involved. Considering the adversity
of the circumstances Dreamworld was in, it needed a crisis management team which would
critically examine the damage and make arrangements to deal with them and minimize its to the
best of their individual abilities. The Principal 7 had further stated the full disclosure of any
social, economical, environmental and any other kind risk all together. Such measures if taken by
5 Redmond, P., Companies and Securities Law - Commentary and Materials, Law Book Co., Sydney, 5th,
2009.
6 Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and practices. Oxford
University Press, USA, 2015

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Ardent, they would have been more aware of the self risk and in the best case scenario, might
even have avoided the accident to begin with. The violation of such stringent principles
(Principle 7 of ASX good governance principle) was clearly seen in the case of Ardent in their
lack of risk management and identification of risk involved in their work.7
The breaching of principle 7 not only exposes the company to Legal Consequences, but
also un-solidifies its grasp over market and competition, leaving it to a complete disadvantage.8
The inability of a company to identify risk and manage them in good care leaves it wide open to
all sorts of risk which are neither beneficial or are of any good interest whatsoever.9 Thus, it
leaves the organization in a fatal state where it neither has the strength to deal with any
unforeseen disasters nor has the capability to manage the future losses and debts that it is sure to
suffer. The good will of the said organization is hampered, leading to a long term liability
resulting from the downfall of its reputation in the society as a whole. Furthermore, it leads to the
withdrawal of any potential investor, back lashing the company to an extreme degree. This also
doesn’t impose any sort of accountability toward its employees, resulting to loss of productivity
and decrease in quality of the work done.
It falls under the executive office of ASX to enforce law on any organization that violates
its rules and regulations. The “If not, why not” policy of ASX allows the organization who are
unwilling to take up and follow the set rules to not consider them, if and only if a good reason is
provided to justify its action. The enforcement decisions are made by the ASX Chief Compliance
officer and then an appeal lies in the ASX appeal tribunal. A penalty of $250000 may be
imposed my ASX on a breach of operating rules, as provided by ASX Enforcement and Appeals
7 Pritchard, Carl L., and PMI-RMP PMP. Risk management: concepts and guidance. CRC Press, 2014.
8 Council, ASX Corporate Governance. "Corporate Governance Principles and Recommendations, 3rd edn (ASX,
Sydney)." (2014).
9 Glendon, A. Ian, Sharon Clarke, and Eugene McKenna. Human safety and risk management. Crc Press, 2016.

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Rulebook. Furthermore, a penalty of $1000000 is charged on a breach of Austraclear
Regulations. In the case of Sino Australia Oil and Gas Limited (Company), ASX was able to
impose a penalty of $80000.10 Civil penalties are also common in cases of breach of rules like
disqualification of the directors.
c)
Section 180 of the Corporation Act 2001 states the duty of the directors to take care and
provide diligence to the organization in any way possible11. It is further stated by the Section 180
that any director or officer must relieve their duty and exercise power if need be in case of prime
diligence and care with can also be exercised by any reasonable person if their circumstances and
situations demand it. Any kind of breach will result to civil penalties according to the Section
131712. In case of business, a judgment is considered most appropriate if it is taken without a
hitch of self interest, involves the overall benefit of the organization in mind, has good faith in it
and of course, is rational in every way imaginable. The actions of director are considered rational
and fitting if it seen that a parson with a rational mind can agree to them. The same section is
also applicable to common law and equity. A business decision is of course, a decision that can
only involve the business of a company.
The recent case of Australian Security and Invest Commission (ASIC) v Cassimatis (No.
8) [2016] FCA 1023, the court lawfully held the directors liable for the breach of the section
180(1) of CA.13 It was seen that their actions were contravening to its provisions. In case of
Centura Global Holdings PTY LTD (2015), it was held responsible by NSWSC 1744, the judge
10 Gilligan, George, et al. "Penalties Regimes to Counter Corporate Misconduct in Australia–Views of
Governance Professionals." (2017).
11 Parker, Clarke, Veljanovski, Posthouwer, Corporate Law, Palgrave 1st edition 2012
12 Ciro T, Symes C, Corporations Law in Principle LBC Thomson Reuters, Sydney, 9th edition 2013
13 Australian Securities and Investment Commission (ASIC) v Cassimatis (No. 8) [2016] FCA 1023

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held breaching of the ‘Environment Planning Assessment Act of 1979’, Section 180 and
penalized the directors.14 ASIC v Mariner Corp (2015) 327 ALR 95 at [444] was held
responsible by the court on the breach of Section 180.15 Though, it did not impose its obligations
on the directors but the obligation was to act in accordance to the existing legal provisions.
Sheahan (as liquidator of SA Service Stations) (in liq) v Verco (2001) 79 SAR 109, the court of
law ruled the duties of the directors under section 180(1) are only towards the company and not
the environment or any shareholders unless and until any required proceedings are brought
ASIC, they are liable to prove that actual loss was suffered by the company or the organization.
In the previous sections, particular circumstances so established that the breach of Principals
done by Ardent as per the regulations laid down by ASX was in relation to risk management. It
is understood by the brief discussion of all the above cases that a breach in the Section 180 of
CA by the directors is established when they are in contravention of any legal provisions which
is ought to be followed by any other rational person in similar circumstances. It is hence thought
that a reasonable person is less likely to breach any given principles of law provided by the ASX
and identify risk as well as manage it most appropriately. It was seen that the breaches made by
the directors of Ardent were under the Section 180 of CA and penalization seems to be most
appropriate outcome, though it would without a doubt, increase the financial burden of an
already suffering organization.
d)
The fatal accident at Dreamworld Leisure Park led to the resignation of Deborah Thomas,
it’s former CEO.16 She attracted a lot of criticism towards herself as she was unable to respond to
14 Re Centura Global Holdings Pty Ltd[2015] NSWSC 1744
15 ASIC v Mariner Corp (2015) 327 ALR 95 at [444]
16 The Guardian. (2017) <https://www.theguardian.com › World › Australia › Dreamworld>.

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the disaster in an adequate manner. The company itself has far-fledged ambitions of becoming
the the global leader in the entertainment industry. Its primary focus is to capitalize on the
market in the US. The fatal accident at the Dreamworld Leisure Park resulted in a sharp drop in
the value of the company’s shares by 7.8%.17 Formal investigation has been launched against the
organization and that attracted a lot of public scrutiny towards it.18 The massive accident forced
the company into submission and it went on its back foot trying to control the damage. They
collectively extended their condolences to the victims and their families. In addition to this, they
accepted that they were deeply saddened by the incident. In the aftermath of this horrific tragedy,
the company shut down Dreamworld Leisure Park for a period of 45days. The financial losses
suffered by the company were to the tune of 49.4 million. They assured the public that they are
working in tandem with the police department along with the emergency authority to discover
the circumstances and the mechanism that caused the fatal accident. The company claims that
they have carried out massive commissioning and undertook substantial safety checks as well as
reviewed all the operations in the park.19 The company accepted that they handled the situation
poorly in the 48 hours immediately after the accident. The company hired a former Queensland
police officer named Mike McKay to assist them in the crisis management operation. They also
hired a crisis management honcho straight from Deloitte named Graeme Newton. The company
also elected to permanently foreclose the ride that caused the fatal accident named “thunder
ride”. They have also laid down guidelines and safety tests that each ride must pass before they
are incorporated into the Dreamworld Leisure Park. They have also stipulated guidelines that
ensure that whenever any accident occurs in the park that result in a death of a patron, their
17 Dreamworld’S Parent Ardent Leisure Is In Damage Control (2017) NewsComAu
http://www.news.com.au/finance/business/other-industries/dreamworld-parent-company-ardent-leisure-in-crisis-
after-fatal-theme-park-accident/news-story/00c3d7a283c19e05427f273bb3a44e39
18 Booth, Simon A. Crisis management strategy: Competition and change in modern enterprises. Routledge, 2015.
19 ABC (2017) <http://www.abc.net.au/news/2017-04-26/ardent-leisure-ceo-to-stand-down.../8472304>.

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primary job is to inform the victim’s family. The company established a proper committee for
crisis management in the wake of the disastrous consequences that the company had to face
following the fatal incident. On the other hand, the company has formulated policies that
facilitate collaboration with the private sector for an outcome process that is properly planned.
However, it has been observed that the company still defends its traditional strong policies and
procedures that attracted about 30 million patrons to the leisure park since the year 1981. This
essentially provides us with the conclusion that company is still majorly defensive in relation to
the fatal accident. They are consistently trying to provide an excuse for the tragic accident.

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Bibliography
ABC (2017) <http://www.abc.net.au/news/2017-04-26/ardent-leisure-ceo-to-stand-down.../
8472304>.
Austin R.P. & Ramsay, I., Ford's Principles of Corporations Law, Butterworths, Australia, 16th
edition, 2014.
Baxt, R., and Fletcher, K.L., Fridman, S., Corporations and Associations Cases and Materials on,
Butterworths, Australia, 10th edition, 2008.
Booth, Simon A. Crisis management strategy: Competition and change in modern enterprises.
Routledge, 2015.
Ciro T, Symes C, Corporations Law in Principle LBC Thomson Reuters, Sydney, 9th edition 2013
Council, ASX Corporate Governance, and A. S. Exchange. "Corporate governance principles
and recommendations . ASX Corporate Governance Council." (2014).
Council, ASX Corporate Governance. "Corporate Governance Principles and Recommendations,
3rd edn (ASX, Sydney)." (2014).
Dreamworld’S Parent Ardent Leisure Is In Damage Control (2017) NewsComAu
http://www.news.com.au/finance/business/other-industries/dreamworld-parent-company-ardent-
leisure-in-crisis-after-fatal-theme-park-accident/news-story/
00c3d7a283c19e05427f273bb3a44e39
Gilligan, George, et al. "Penalties Regimes to Counter Corporate Misconduct in Australia–Views
of Governance Professionals." (2017).

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RISK MANAGEMENT
Glendon, A. Ian, Sharon Clarke, and Eugene McKenna. Human safety and risk management. Crc
Press, 2016.
Hanrahan, P., Ramsay I., Stapledon G., Commercial Applications of Company Law. Oxford 18th
edition 2017
Harris, J. Hargovan, A. Adams, M., Australian Corporate Law LexisNexis Butterworths 5th
edition, 2015.
Li, G, Riley, S. Applied Corporate Law: A Bilingual Approach LexisNexis 1st Edition 2009.
Parker, Clarke, Veljanovski, Posthouwer, Corporate Law, Palgrave 1st edition 2012
Pritchard, Carl L., and PMI-RMP PMP. Risk management: concepts and guidance. CRC Press,
2014.
Redmond, P., Companies and Securities Law - Commentary and Materials, Law Book Co., Sydney,
5th, 2009.
The Guardian. (2017) <https://www.theguardian.com › World › Australia › Dreamworld>.
Tricker, RI Bob, and Robert Ian Tricker. Corporate governance: Principles, policies, and
practices. Oxford University Press, USA, 2015.