GPHR Risk Management and Compliance 3 — Questions and Answers
Question 1: Which concept describes the process by which a parent company can be held legally responsible for the actions of its foreign subsidiaries regarding human rights violations?
- Jurisdictional immunity
- Corporate veil protection
- Parent company liability / duty of care (Correct answer)
- Extraterritorial exemption
Correct answer: Parent company liability / duty of care
Parent company liability or duty of care holds that a parent company can be legally responsible for harm caused by subsidiaries if it exercised control or created the risk.
Question 2: A global HR director is implementing a new anti-harassment policy. To be effective internationally, the policy MUST:
- Be written solely in English and translated on request
- Apply only to headquarters employees and be advisory for local subsidiaries
- Be adapted to local legal requirements while maintaining core global standards (Correct answer)
- Prohibit all forms of social interaction between employees to avoid ambiguity
Correct answer: Be adapted to local legal requirements while maintaining core global standards
A global anti-harassment policy must balance consistent core standards with adaptation to local legal definitions and cultural contexts.
Question 3: What is the significance of the 'Protect, Respect and Remedy' framework in global HR compliance?
- It is a U.S. labor law requiring employers to protect whistleblowers
- It is the UN framework outlining state duties and corporate responsibilities regarding human rights (Correct answer)
- It is an ISO standard for workplace safety management systems
- It is an OECD guideline for multinational enterprise financial reporting
Correct answer: It is the UN framework outlining state duties and corporate responsibilities regarding human rights
The 'Protect, Respect and Remedy' framework, developed by John Ruggie for the UN, defines state duties to protect human rights and corporate responsibility to respect them.
Question 4: An employee in a country with no legal protection against discrimination based on sexual orientation is fired for being gay. The parent company is headquartered in the US. What should the global HR policy address?
- Apply only local law since the company must respect national sovereignty
- Enforce the parent company's non-discrimination standards globally, even where local law does not require it (Correct answer)
- Transfer the employee to the headquarters country to provide legal protection
- Avoid addressing the issue to prevent political controversy in the host country
Correct answer: Enforce the parent company's non-discrimination standards globally, even where local law does not require it
Best practice for global companies is to apply their own non-discrimination standards universally, even in countries where local law does not mandate such protections.
Question 5: What does 'reputational risk' specifically refer to in the context of global HR compliance?
- The risk that HR staff will leave the company for competitors
- The potential for negative public perception to harm the company's brand and business relationships (Correct answer)
- The legal liability arising from non-compliance with labor laws
- The financial risk associated with paying compliance penalties
Correct answer: The potential for negative public perception to harm the company's brand and business relationships
Reputational risk refers to the potential damage to a company's brand, trust, and stakeholder relationships resulting from perceived or actual misconduct.
Question 6: A company acquires a foreign subsidiary and discovers undisclosed labor violations. Under the GPHR framework, what is the BEST immediate action?
- Ignore the violations since they occurred before the acquisition
- Conduct a thorough HR due diligence audit and develop a remediation plan (Correct answer)
- Fire all local management responsible for the violations immediately
- Report the violations to all regulatory bodies before assessing the situation
Correct answer: Conduct a thorough HR due diligence audit and develop a remediation plan
Post-acquisition, HR should immediately conduct due diligence to fully understand the scope of violations and develop a structured remediation plan.
Question 7: The principle of 'proportionality' in risk management means that:
- All identified risks must receive equal resources to mitigate
- The level of response to a risk should correspond to its severity and likelihood (Correct answer)
- Proportional penalties must be applied equally to all employees who violate policy
- Risk management budgets must be proportional to company revenue
Correct answer: The level of response to a risk should correspond to its severity and likelihood
Proportionality in risk management dictates that resources and responses should be scaled to the actual severity and probability of each risk.
GPHR Risk Management and Compliance 3
Which concept describes the process by which a parent company can be held legally responsible for the actions of its foreign subsidiaries regarding human rights violations?