The concept of vicarious liability–being liable for the acts of others–applies to both of this week’s topics, crime and torts. Often, when a large corporation is found guilty of tortious activity, the tort is clear, but who’s responsible within the corporation is not. Thus, when a plaintiff wins a large financial judgment against a corporation in a tort case, this judgment is often passed through to shareholders in the form of lower dividends or lower share prices, or to consumers through increased prices. Rarely is a top leader of the corporation held accountable. In fact, to attract good managers, corporations must offer them liability protection from shareholder suits.
Are there any solutions to this dilemma?
Solution: Any kind of Crime, fraud, error and tort etc is not acceptable in any kind of organisation in professional terms. There should be a mechanism where the cause ( Crime or tort ) and the facilitator of the respective cause i.e. guilty person must be recognised at the earliest. In order to prevent the organisation from such crimes or torts as well as to recognise the guilty. There are certain solutions, recommendations and suggestions.
(1) Foundation: The foundation of the organisation should be strong, as well as the organisation structure, should be comprehensive, crystal clear with parity between authority and responsibility.
(2) Risk Assessment: The nature of risk arises from crime or tort must be categorized in terms or size ( Major and Minor risk) Along with their consequences and impact on the productivity of the organisation.
(3) Internal check system: The internal check system of the company should be strong and systematic. There should be an immediate supervisor for every employee so that there will be a check on the every activity of the organization.
(4) Responsibility Accounting: Every department and employee must get specific roles and responsibilities so that later on the organisation is able to trace the roots of the problem i.e. fraud and mistakes etc