In any contractual relationship, it’s important for the parties involved to properly allocate their combined risks.
Contractual risk transfer identifies critical exposures and assigns responsibility for preventing and paying for losses — but it’s not always an easy process. However, protecting your organization’s assets and bottom line is worth the effort.
Related: 'Risk management director' named as one of the best jobs in America
A critical challenge
Managing contractual risk can be challenging, increasingly so as additional insured status has been eroded over time. In 2013, for example, ISO introduced new additional insured endorsements to commercial general liability policies that restricted limits afforded to additional insureds to those specified in a contract. That has made the underlying contract — and the allocation of contractual risk — more important than ever before.
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