Ethical Accounting – Organizational Ethics And Corporate Governance (C03) Practice Test

Exposure to potential liability for technology failures is best understood through the lens of business risk. This concept centers on identifying what could go wrong in operations, estimating how likely those failures are, and assessing the financial and reputational impact they could have on the organization. In the Bhopal case, a severe industrial accident underscored how design, maintenance, and safety lapses can lead to enormous legal costs, regulatory penalties, cleanup obligations, settlements, and long-lasting reputational damage. Framing it as business risk helps a company prioritize safeguards, allocate reserves, and strengthen governance to prevent or mitigate such exposures. While other ideas can play a role in decision-making, they describe different angles. Professional skepticism is about an auditor’s mindset to challenge information, not a framework for evaluating liability exposure. Cost-benefit analysis is a tool to weigh actions but doesn’t by itself define liability risk, though it can inform safety investments. Rights Theory provides an ethical lens about stakeholders’ rights, but it isn’t the operational framework used to gauge liability exposure from technology failures.