Page 138 - RISK Management IC 86

Risk Management

that they accept even those liabilities which normally do
not fall on the organization. The agreement with standard
clauses in sales and purchasing contracts help to avoid
referring every case to insurers.

Another important factor is cost. Like ,the transfer of
risk by subcontracting, the imposition of indemnity or
exclusion clauses on suppliers and customers is likely to
be included in the contract price.

E.g building and civil contractors often include insurance
premiums in their tender prices and bills of quantities.
So, in terms of expected risk cost nothing much
changes, only the variation in outcomes are being
transferred.

Hence many large organization having contractors and
sub contractors working for them regularly assume the
risk themselves to remove any doubt as to where the
liabilities would lie.

Also, since large organization are capable to arrange
insurance on more favourable terms in its own name than
its contractors than in the name of its contractors, it is in

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