Page 151 - RISK Management IC 86

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its performance, and hence is generally oriented towards
short term profit.

So, in this scenario, often long term risk management
measures are difficult to implement. In the family business
however, conservation of the business is of prime
importance. So risk management proposals to protect long
term business will be more readily accepted.

(iii) Local Authority - Local bodies differ from other types
of organizations as they do not have any profit
objective, but derive their income from central
government and local rates.

Although, theoretically there is no limit to the size of loss
that a local authority can recoup by charging higher rates,
coupled with borrowing to spread over several years, in
practice, attitudes towards the size of loss that can be
financed internally depends on 2 factors: (i) the political
party in power must have regard to the effect that a large
rate increase would influence the electoral chance and (ii)
social conscience also may influence the management team
responsible to an elected body and it may feel compelled to
carry out in full, all statutory safety regulations and
implement only the best available measures technically.

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