The Babylonian King Hammurabi ruled for nearly 42 years, from circa 1792 to 1749 BC. He is credited with creating one of the earliest examples of a set of legal code/rules - the Hammurabi Code- that contained 282 rules. Modern humanity, in its 70,000 years of development has sought to establish rules so as to have a fundamental system of governance and constitution. But are rules and regulation necessary for the survival of the human society? And should we care about them?
Yes. We need them. Yes. We should care about them. Why? Because they save lives and livelihood, they protect businesses and they protect society as a whole.
Let us take a couple of examples to illustrate this point. The first one relates to the April 1989 Hillsborough Stadium disaster in Sheffield, the worst stadium-related disaster in English sports history where 96 Liverpool fans were killed. The second coroner’s inquest has recently ruled that police and ambulance services failed to fulfill their duty of care and concluded that the supporters were unlawfully killed due to grossly negligent failures.
The more recent fatal and deeply regrettable fire blaze at Grenfell Tower in London on 14th June 2017 in the borough of Kensington and Chelsea, is the second example of failure to verify that the correct materials were used. The press report that that this human tragedy could have been avoided, had there been more regard for building and general health and safety (and fire) regulations. We have now reached a point where there might be separate investigations by the Police, the Health and Safety Executive, the Council and by the Central Government (through its enquiry), amongst others. What are the legal ramifications?
a) contractual claims
b) charges of Corporate Manslaughter to be potentially brought against certain parties
c) claims on grounds of negligence between parties
d) criminal investigations brought by the Health and Safety Executive and/or the Crime Prosecution Service
Risk is costly
Everyone would have wanted to go back in time and do things differently in order to avoid this tragic loss of life. And in general there lies the central problem of compliance with regulations- risking it usually comes at an increasing cost. The cost is not just in monetary form but it can be damage to reputation, a merry-go-round of parties blaming each other, personal liability, the emotional stress of litigation, the loss of customers, the end of careers and the list is nigh endless.
Many businesses are said to concern themselves primarily with the financial consequences of breaches of regulation. It is reported that the new regulations set by the EU for card payments may result in the regulator dishing out £122 billions in fines when they came into force in 2018. Compliance commentators are aware of the Morgan Stanley report, which worked out that companies in the financial industry, had faced lawsuits and/or fines up to the amount of £260 billions. We are in uncharted territory and risk is now truly costly for businesses.
Avoiding the “deer caught in the headlight” moment
With increasingly complex legislations and compliance requirements, fortunately, there are also better systems and mechanisms for minimizing risks to organisations. These come in the form of firms set up to help clients achieve compliance without having to worry about that much-dreaded moment. The mission of CRC is to be the leading firm in this space.
Steven Noel Rungasamy