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The Business Case for Preparedness
Lower Legal Costs
January 1, 2006 1:01 AM
Corporations are vulnerable to significant legal liability if they do not undertake emergency preparedness efforts. This liability can result from several sources including common law negligence, specific legislation/regulations and contractual obligations.
A primary source of corporate liability is negligence law which requires corporations to exercise reasonable care under the circumstances, including care to prevent an accident or other injury. The basic principles of negligence law readily apply to emergency preparedness by organizations which focus on the prevention or mitigation of the impact of foreseeable hazards.
In addition to negligence being well-grounded in historical practice, evolving theories of liability are increasing from a practical perspective as of late. As referenced earlier, the essence of negligence is the failure to exercise reasonable care under the circumstances. On a wide ranging basis, �the circumstances� have changed to heighten liability. Arguably, the probability of an event occurring, the gravity of the resulting injury, and the burden of adequate precautions are all changing to potentially increase corporate liability.
Furthermore, in addition to more general liability under negligence law, corporations may have liability based upon specific legislation and/or regulation that addresses their industry. These sources are increasing requirements in this regard in targeted arenas including financial services and other critical infrastructure.
Corporations may also have liability based upon requirements that arise from specific contract obligations with other parties. This is increasingly the case in supply chain �push-down� requirements whereby corporations require their suppliers to validate their preparedness programs as a condition of doing business.
Thus, corporations would be prudent to undertake preparedness efforts to mitigate or avoid legal liability from these sources.