Dr. Karl J. Duff, Ph.D., J.D.
Principal and LLC Manager
“Cost of Risk (CoR)” is a phrase used seemingly everywhere by everyone. At PLC, our approach to the CoR is viewed from three perspectives: business opportunity, risk prevention, and loss mitigation.
At PLC, we understand that the only way to completely avoid risk is to do no business. We understand that a variety of business-based drivers influence decisions to enter into commercial relationships. As a consequence of this perennial reality, we readily acknowledge the difficult-to-quantify/imponderable nature of some business decision drivers. Our job is to assist our clients in identifying major risks created by contractual provisions and to provide a reasonable assessment of those risks, not to insert ourselves as decision-makers.
PLC focuses on three primary risk prevention activities with its clients: identifying and managing contractually-created risks, risk management training and assistance with insurance program design, including the use of captive insurance entities, if appropriate.
PLC has deep experience in assessing the range of claims issues which can arise for design professionals. We can assist in claims management, counsel engagement and the evaluation of potential settlements.
PLC has more than three decades of experience in negotiating contracts for design professionals. Increasingly, design professionals are facing demands by clients that the firm assume unrealistic and inappropriate risks. The need for creative contractual solutions which both allow the firm to “get to yes” with a healthy percentage of contractual engagements (while also maintaining a reasonable risk-reward balance) is increasing.
Understanding Client Goals
PLC does not use a “one size fits all” approach. We invest significant time and effort in understanding client goals and needs, as well as the current status of the client’s risk management process. This, in turn, allows PLC to tailor recommendations to the client’s business context.
Understanding Client Risk Tolerance
PLC also devotes ongoing attention to the state of the client’s risk tolerance and risk appetite. Of course, as client goals and business contexts evolve, risk tolerance and risk appetite can change.
Clarifying “Transferred” and “Retained” Risks
In many situations, PLC can provide assistance in assessing whether or not a risk created by a contractual provision is likely to be covered by an insurance policy. If we assess that a risk is likely not covered, depending upon the Client’s risk tolerance, risk appetite and business context, PLC can provide assistance in managing the “retained risk.”
Sound contractual risk practices are an integral part of PLC’s Total Risk Approach (“TRA”) for design professionals.
PLC has extensive experience in assisting clients with the design, implementation and modification of internal risk processes. Experience shows that a “bottom-up” risk assessment/risk-filtering process is efficient, effective and sustainable. Proper delegation of specific risk decisions to well-trained staff allows senior management to “manage by exception” while maintain enhanced awareness of the risks being assumed by the firm.
Our experience is that insurers generally view a well-designed risk process with favor and as one indication of an attractive risk profile. This is part of PLC’s Total Risk Approach (“TRA”) for design professionals.
It is vital for fighter pilots. It is crucial for a military fire team clearing a building in hostile territory. And it is essential for design professionals in today’s risk environment. Enterprise-wide risk awareness is a fundamental requirement for sustained success, risk identification, risk assessment and loss mitigation.
PLC has found that when coupled with sound risk process design, internal training which is tightly focused on the Client’s key issues is the optimal way to pursue this goal. PLC’s real-world-based, highly effective training processes help our clients achieve and sustain situational awareness.
PLC’s training programs are all custom “one-off” processes. We work with Client-designated internal partners, Client brokers and insurance carriers to review losses, new service areas, personnel experience and current risk management programs to develop customized, targeted, results-oriented training which is fully engaging to participants.
As is the case with PLC’s Risk Process Design, our experience is that insurers generally view focused, targeted, custom training favorably. Our training services are an integral part of the PLC’s Total Risk Approach (“TRA”) for design professionals.