Risk Management is the science of avoiding, reducing, limiting, or transferring the risk of financial loss to which every individual is exposed.
In the business environment, risk takes the form of physical damage, consequential loss of income, and the threat of lawsuits.
For professionals, the most significant risk to a practice is the legal liability arising from mistakes and omissions that arise from advise or services performed. Lawsuits can be filed alleging breach of contract, negligence and other torts (civil wrongs) or various statutory and regulatory obligations.
Professionals must manage the risk they face by instituting a number of techniques. These include:
- Avoiding the risk by not providing services or advice in the areas that are high risk when the possibility and potential for law suits is significantly greater.
- Reducing risk by use of best practice methods to ensure work product review, continuing professional education, the use of state-of-the-art technology and a thorough understanding of client expectations and the ultimate outcome of a failure to perform.
- Limitation of risk by adopting protective corporate structures, the use of appropriate engagement and disengagement agreements including limitation of liability clauses and establishing agreed payment terms with performance mile posts and written procedures for settlement in the event of a fee dispute.
- Transfer of the risk of financial loss arising from a lawsuit to an expert and well-managed insurer, through the use of an appropriate written insurance contract that encompasses all the services and advice provided by the professional.
Jorgensen & Company provides a variety of general and individually tailored risk management services to support and supplement professional liability insurance placed on behalf of clients.