FIDIC 2005 BeijingWorkshop 14.ppt

FIDIC 2005 BeijingWorkshop 14 Risk and Liability for Consulting Engineers: An Australian Perspective Risk or Liability Management? Risk management is one aspect of project management and like quality management, environmental management and safety management it is about the project or the service we deliver to our clients Liability management on the other hand is about managing the impact of claims for loss on our business Will Managing Risk Limit our Liability? If risk is managed effectively, it may reduce the likelihood and severity of loss However, the consulting engineer is rarely in a position to manage, control or bear project risk Liability management may prevent or reduce the loss incurred by the consulting engineer. The Business Environment The last 10 years PI Insurance Where are we heading? ACEA Initiatives The Problem Onerous Terms What can you do? Last 10 years Increasing obligations on consultants - well beyond common law Common law has moved in its application exposing consultants to new sources of claim Clients laying off responsibility for own actions Trade Practices exposure Occupational Health Safety Insurance crisis PI Insurance 2001 -2004 Increased premiums Absorb the first level of loss - increasing deductibles Increasing use of captive insurance Restricted cover - narrower policy wording Insurers concentrate on risk selection Restrictions on availability PI Insurance - Unreasonable Outcomes? Could infer consultants are taking on risks they cannot manage or bear Could infer the problem is inherent in the forms of project delivery we use When the loss ratios improve, capital will flow back into the PI Insurance market ACEA Initiatives Law reform Policy debate Information Negotiation ACEA Initiatives Promoting Legislative Reform Professional Standards Legislation Proportionate Liability Trade Practices Act Amendments Educating Insurers and Firms Insurer Site Visits Guidelines and Tips for Firms Continuing Professional Development Individual