Risks and Implement Effective Measures
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Added on 2020-02-19
Risks and Implement Effective Measures
Added on 2020-02-19
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Running head: CORPORATE LAWCorporate LawName of the StudentName of the UniversityAuthor Note
1CORPORATE LAWTable of ContentsQuestion A.......................................................................................................................................2Question B.......................................................................................................................................4Question C.......................................................................................................................................6Question D.......................................................................................................................................8Reference List................................................................................................................................10
2CORPORATE LAWQuestion AAccording to the Principle 7 of the Australian Security and Investment Commission,the board of directors of a company with respect to the public company is under statutory duty todetect risks and implement effective measures in order to address such risks. In the event, theBoard of directors of a public listed company fails to recognize the risks arising in the companyand is unable to resolve the same; it would affect the shareholders of the company. Theshareholders, employees, consumers of the company would suffer loss and such failure shallhave an adverse impact on the society as well1. The ASX has specified certain recommendations with respect to risk management, whichrequires every board of directors of a public company to establish at least one committee with aview to identify and alleviate the risks. The committee shall review the risk managementframework of the company every year to ensure the efficacy in the implementation of theframework2. The member of the committee shall include minimum three directors who shall beconferred with then power to work independently without any interference. The ASX have maderecommendations taking into consideration of the accountability of the review process. The recommendations require the directors of the company or the committee members tomake necessary disclosure of the role and structure of the internal audit functions of thecompany. Any material exposure with respect to environmental, economic and social risks1Tricker, RI Bob, and Robert Ian Tricker.Corporate governance: Principles, policies, and practices. OxfordUniversity Press, USA, 2015.2Guiso, Luigi, Paola Sapienza, and Luigi Zingales. "The value of corporate culture."Journal of FinancialEconomics117.1 (2015): 60-76.
3CORPORATE LAWassociated with the public company must be disclosed along with the disclosure of the structurethat is adopted by the company for managing the risks associated with the company.In the given scenario, the Board of Ardent leisure has been alleged for causing fatalaccident and failed to take any immediate initiative after the fatal accident. The company havebeen subject to several criticisms for failing to carry out safety management of the company. Thecompanies have failed to recognize and mitigate the risks that were associated with the incident.It is a well-known fact that the occupier of the premises is held responsible for any harmthat is caused to any person within the premises. Hence, it can be said that in the ArdentLeisure’s case, the company is held liable for the accident that claimed the lives of severalpatrons. If the company had adopted an effective risk management framework, it would haveenabled the company to recognize the risks that was associated with the particular ride and couldhave mitigated the same, ensuring safety of the patrons riding them. In regards to the post accident circumstances, the company had failed to take reasonablesteps to deal with the subsequent crisis due to lack of risk management tactics. If the companyhad adopted appropriate risk identification system, it could have implemented effective measuresin dealing with the crisis post the Dreamworld incident. It lacked professionalism while dealingwith the subsequent crisis, which caused hardship for the families of the deceased patrons3. Theabsence of an effective risk management framework in the company has not only causedfinancial loss to the country but also led to a loss of goodwill of the company. Therefore, fromthe above facts it is evident that the Board of Directors failed to identify the risks associated withthe rides and caused such a fatal accident.3Epstein, Marc J., and Adriana Rejc Buhovac.Making sustainability work: Best practices in managing andmeasuring corporate social, environmental, and economic impacts. Berrett-Koehler Publishers, 2014.
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