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I wanted to discuss the TJ Hooper case, which happened many years ago in the United States and concerned negligence liability.
To summarise, the court found that even though a technology was not industry best practice, it should have been implemented by the service provider, because the cost benefit analysis inequality B<PL held true.
What I found interesting, from an accounting perspective, is that the cost of investing in the safety technology, B, was deemed to be, initially at least, payable by the service providers. However, those same providers did not benefit from the reduction of the risk exposure to the loss, L. That was for the benefit of the customer. This differs from the cost benefit analysis done by companies, when deciding on general investments, because they are the ones who will also benefit from the upside.
So, if new technologies keep coming on board, and a service provider evaluates that B<PL in each case, they will have to invest in those technologies, in order to avoid future negligence claims. However, by incurring these costs, they are reducing their profit margins, from the landscape before the technology was invented, which is ironic, because they are now providing a less risky, more profitable service to their customers than they were before.
To me, it seems that the risks and rewards should be married off with each other and that the cost B, should ultimately be recharged to the customer.
However, considering the customer's position, they could argue that they might simply switch to service providers who do not recharge for these new technologies. The argument being that if the providers fail to use the tech and suffer a loss, the client can successfully sue for the full amount via a negligence claim.
What are people's views on this? If you work in the Cyber Security industry, for example, new technologies are coming along all the time and it's a significant task to run cost benefit analysis on all of these, plus a significant impact on cash flows to invest in them.
Finally, please accept my apologies if the overall content is considered not suitable for this forum. I can't seem to post in other areas (please let me know if you know how), and since I came across this scenario, while in full-time education, it does at least have some relevance to being on a career break.