The essence of what Stanford Risk Management Services, Inc. does is analysis of our clients operations/planned acquisitions/planned purchases and planned products for manufacture or distribution.
Although the standard risk management tolls are employed in our analysis
- Owned Property- Where the client has physical title to the real; and personal property and therefore the risk of it’s loss or damage.
- Property for which the Client has assumed responsibility for the loss of property that does not belong to the Client. This assumption of liability is enforced through a variety of mechanisms the most common being a Lease or Rental Agreement.
Contractual Analysis and Risk Management
The majority of our time and expertise is spent in reviewing the various contracts, leases, bill of ladings, contractor/ subcontractor agreements, Site access agreement and other legal documents that detail the responsibilities of the parties and the allocation and required funding mechanisms for potential loss.
Critical to the assumption or allocation of the subject risks is the analysis of the need for the transfer. In most cases the allocation is a result of what is perceived as “Standard Practice” however, leaving the allocation to normal business practices can result in an inadequate or unfulfilled transfer and costly legal litigation.
In order to allocate potential liability or loss it is essential that the exposures be understood and the intent of the parities be clear. Often the transferee may be in a better position to control the exposure and if need be secure insurance protection as a funding mechanism. In other cases the transfer may be justifiable and either uninsurable of cost prohibitive to insure. Once the exposure is identifies then the negotiation of how to handle the particular exposure begins.
It may be a simple as having the FOB terms modified to be FOB purchases location so that upon delivery the insurance for the location will pick up the exposure
In commercial transactions, parties seek to allocate risk by means of contractual assignment of rights, responsibilities and procedures. This is not as simple as merely transferring risk to a third party via an insurance contract.