Specialist risk management services could improve management of professional services including design activities and help reduce your professional liabilities.
Many of leading UK construction companies have experienced a major professional indemnity (PI) claim, some amounting to multiple millions. Without appropriate insurance, these claims could have resulted in financial failure.
As professional services become more complex, the risk of claims increases. Poorly managed construction design could result in PI claims which seriously damage your balance sheet without the appropriate coverage.
“In addition to the cost, these claims can have damaging side effects,” says Graham Nicol, Managing Consultant of MYR Consulting, specialists in professional services risk management.
“The claim becomes a major project in itself, taking up significant time and energy from key commercial, design, design management and executive staff. There’s reputational damage too; claims can affect relationships with employers, insurers and other stakeholders in the project.
“Claims can also dent confidence in the organisation’s decision making and internal controls, undermining the process of bidding for future work.”
How risk management can help
Some of the most eye-watering PI claims arise when a company fails to maintain control of the design process; something that can be avoided with effective risk management.
No matter how reputable the design consultant, a multitude of scenarios and working practices could trigger PI risk if not managed appropriately.
“Lack of proactive risk management; lack of - or unclear - business values and culture; immature design management processes and poor checking and assurance, are just a few of the factors that can increase risk,” says Graham.
Contributing factors can be numerous and complex. Detecting and managing them can be difficult and time consuming. When this happens, it is often prudent and cost-effective to engage expert help, in the form of professional services risk management (PSRM).
What is professional services risk management?
It’s a long title that describes a niche service, one that’s helping consultants, engineers and contractors avoid devastating claims.
PSRM is a way to ensure you are using best practice. It enables companies to put risk appropriate business controls in place to manage critical activities such as the design process, including any changes that could cause a disconnect within the process.
Companies such as MYR Consulting provide major clients with long term support in improving the delivery of professional services. They do this by designing tailored, fit-for-purpose PSRM programmes that are continuously adapting to change, and are mindful of how both business circumstances and legislation can alter.
How to find the right PSRM consultant
Graham recommends engaging a risk management firm that goes above and beyond PSRM services. “The focus should be on working with all levels of an organisation’s management team. Your risk manager should work with you to understand potential risk factors (positive and negative), including your business strategies and culture, your appetite for risk and the business internal control model, and much more.”
Look for PSRM programmes that provide the following:
• A platform for marketing your organisation’s PI insurance programme. One that enables insurers to better understand the nature of your PI exposures and how they are managed
• Detailed risk profiles to enable formal monitoring and management of material professional services risks
• Detailed action plans that improve professional service controls, and your overall business practices.
PSRM services give your insurer an extra degree of confidence in your firm, adds Judy Neich, Business Development Manager for JLT Construction: “This is a service you might not have heard of, but it can be vital in improved management of your design risks and other professional obligations.”
“JLT Construction has been successful in securing funding from PI insurers for initial PSRM reviews,” adds Neich. “Insurers are happy to contribute as they perceive real value in the enhancement of design management controls, meaning an improved risk for both the insured and insurer and ultimately a reduction in claims.”
For further information on PSRM and the value it can add to your business please contact Judy Neich, Business Development Manager for JLT Construction on +44 (0)20 7528 4024 or email firstname.lastname@example.org