Forensic Systems Engineering

7Forensic Analysis of Process Liability

CHAPTER MENU

1. 7.1 Improper Manufacturing Operations
2. 7.1.1 Verification and Validation
3. 7.1.1.1 Nonstandard Design Procedures
4. 7.1.1.2 Unverified or Unvalidated Design
5. 7.1.1.3 Tests Waived by Management
6. 7.1.1.4 Altered Test Procedures and Results
7. 7.1.2 Resource Management
8. 7.1.2.1 Unmonitored Outsourcing
9. 7.1.2.2 Substandard Purchased Parts
10. 7.1.2.3 Ghost Inventory
11. 7.1.2.4 Ineffective Flow Down
12. 7.1.3 Process Management
13. 7.1.3.1 Forced Production
14. 7.1.3.2 Abuse and Threats by Management
15. 7.2 Management Responsibility
16. 7.2.1 Effective Internal Controls
17. 7.2.2 Business Standards of Care
18. 7.2.3 Liability Risk Management
19. 7.2.4 Employee Empowerment
20. 7.2.5 Effective Management Review
21. 7.2.6 Closed‐Loop Processes
22. References

In reference to business operations, process liability refers to misfeasance, malfeasance, fraud, and false claims. We usually do not think of associating fraud with operations beyond its financial aspects. Certainly, fraud happens in marketing or in accounting or perhaps in the boardroom, but in operations? However, as I commented earlier, a review of the literature shows that fraud in operations is a significant source of liability suits. If fraud were limited to its popular conception of cheating for self‐gain, then such events might be quite rare. But fraud is defined much more broadly than that. There are two definitions: (i) the deliberate deception practiced so as to secure unfair or unlawful gain and (ii) the representation ...