Magazine article Risk Management

Creating Public Policy and Influencing Legislation

Magazine article Risk Management

Creating Public Policy and Influencing Legislation

Article excerpt

Achieving success in the business world requires the willingness to grasp the opportunity to implement positive change. Through public policy, risk managers have this opportunity and should relish their place as influential members of the business community.

Public policy is the analysis of how laws can be used to improve our society. It is the basis on which legislatures enact, revise or repeal statutes and regulations. The purpose of an institution developing public policy is to inform legislators and others how the implementation of certain ideas, through the use of our laws, can enable the institution to achieve desired goals that will also benefit society. Since all institutions are affected by the actions of legislatures, they should all have defined public policy on issues of importance to them.

In the entrepreneurial arena, the development of public policy strategies that complement the financial objectives of an organization has become an integral part of sound business planning. This consideration has become a necessity because society, as wall as our lawmakers, now believes businesses have a social responsibility in addition to their own goals of profitability. For example, businesses are not only expected to develop and manufacture desired products safely but also to fulfill a duty to society to pay for the cleanup of legal disposal sites that have become hazardous to encroaching residential communities. Similarly, companies are not only required to pay for the health care of their employees for work-related injuries and illnesses, but are also expected to provide care for the nonoccupational illnesses of their employees as well as their families.

Risk managers possess expertise on institutional risk issues and should be at the forefront of developing and promoting public policy that advances the interests of their organizations in such matters. Developing public policy on behalf of an institution requires the accurate identification of the organization's risks and an understanding of the organization's philosophy, culture and goals as well as those of the communities in which it operates and on which it has an impact. Promoting public policy requires the identification and solicitation of external parties and institutions that can help to transform policies into actual legislation.

Environmental cleanup and liability, the Occupational Safety and Health Administration (OSHA), workers' compensation and civil justice reform provide some examples of legislative issues that present opportunities for risk managers to influence change on behalf of their organizations.

Environmental Cleanup Reform

The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) was enacted in 1980 to compel responsible parties to clean up polluted waste sites and to establish a trust to pay for unallocated cleanup costs. "Superfund," as the law is commonly known, has not proven to be very effective. Although more than 1,400 sites have been placed on the National Priorities List (NPL) since 1980, only 161 have been cleaned to date. The original budget for Superfund was $1.6 billion for a five-year period. However, $13.4 billion has already been spent by private parties and the government, and the current average cost-per-site is $30 million.

Risk managers can influence the outcome of the current Superfund reform efforts embodied in proposals such as the Reform of Superfund Act of 1995 (H.R. 2500), and the Accelerated Clean Up and Environmental Restoration Act of 1995 (S. 1285), by developing policies that address Superfund's liability scheme, the remedy selection process, the role of the states and local communities in Superfund efforts and the redevelopment of sites. If, for example, an organization is potentially liable even though it was a minor contributor to the creation of a hazard, it may advocate replacing the current liability structure with one based on proportional liability. …

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