Welcome to RIMScast. Your host is Justin Smulison, Business Content Manager at RIMS, the Risk and Insurance Management Society.

In this episode, Justin interviews Andrew Bent on risk management involvement in developing requirements for contracts, the most important thing a risk professional can do before they start drafting insurance requirements, and the types of coverages and limits to include in a contract. Andrew shares his approach to reviewing contracts received from other organizations, and his pet peeves about reviewing contracts that have requests for endorsements or policy coverages that are hard to obtain or no longer exist. He shares some general tips for negotiations.

Listen in for advice on win-win strategies in contract negotiations.

Key Takeaways:

[:01] About RIMS.

[:14] Member registration for RISKWORLD 2025 is now open! General registration opens on December 4th. Visit RIMS.org/RISKWORLD.

[:26] About this episode. From RIMS headquarters in New York, we will delve into the importance of contract review in risk management with our guest today, Andrew Bent.

[:47] The next RIMS-CRMP Exam Prep Virtual Workshop will be held on December 17th and 18th. The next RIMS-CRMP-FED Exam Course will be hosted along with George Mason University from December 3rd through the 5th.

[1:06] Links to these courses can be found on the Certification page of RIMS.org and through this episode’s show notes.

[1:13] RIMS Virtual Workshops! “Risk Appetite Management” is back by popular demand. Registration closes November 19th for the session on November 20th and 21st. That session will be led by Ken Baker.

[1:28] Elise Farnham of Illumine Consulting recently joined us here on RIMScast. On December 4th and 5th, she will host “Applying and Integrating ERM”. On December 17th and 18th, she will host “Captives as an Alternate Risk Financing Technique”.

[1:45] Those are just three of the workshops RIMS offers; we have lots more! Other dates for the Fall and Winter are available on the Virtual Workshops calendar, RIMS.org/virtualworkshops.

[1:57] Interview! Our guest today has 20 years of experience as a risk management professional and consultant and is known for the development, implementation, and optimization of ERM frameworks. He is Andrew Bent, the Senior Engagement Lead from Marsh Advisory.

[2:17] Andrew is also one of the founding members of the RIMS CRMP Commission. He’s here to talk about the importance of contract review in risk management and to provide tips and strategies for effective review.

[2:28] We will also discuss how contract review can even influence business relationships. Andrew Bent, welcome to RIMScast!

[2:57] Andrew started in New Zealand as a chemical engineer. He compares chemical processes with risk frameworks. He then worked in risk management with the New Zealand Customs Service.

[4:11] Australia and New Zealand’s governments made drastic cuts to public service about how resources were deployed. They did this with good risk management theory, the 4360 standard.

[4:48] The Customs Service applied the 4360 standard to the risks of people, crafts, and goods coming across the border. They did risk assessments on many things. It was a good way for Andrew to understand how risk works and how to either mitigate risks or live with them.

[5:22] There are only so many shipping containers that can get opened every day and so many people who can be evaluated every day if you don’t want to shut down your country’s entire commerce trade and flow.

[5:41] Andrew stayed there for a few years. Then he moved to Canada in 2009, a financially difficult time. He loved Canada and found the people to be similar to New Zealanders. He worked in a large municipal police agency in Western Canada.

[6:55] They were forward-thinking and strategic in how they thought about risk. He was able to help set up an enterprise risk management team and help accelerate the integration of strategy and risk.

[7:17] For a time, Andrew was the only chemical engineer in the world who had moved to Alberta and didn’t work for an oil and gas company. So he went to work for an oil and gas company for a while.

[7:27] Andrew found RISKWORLD hugely beneficial to his work. Andrew had a challenging job working beside health and safety folk. He developed a broad range of understanding of health and safety rules and regulations and helpful insights into operations and business.

[7:54] Andrew then moved back into the regulatory space with one of the provincial energy regulators. Then he met his now wife, an American. They had a long-distance commuting relationship until he moved down to the U.S. and subsequently to Washington, D.C.

[8:23] Along the way, Andrew had a couple of additional jobs, including cyberspace and risk management teams and risk management functions in the gig economy.

[8:51] Fundamentally, Andrew has found that risk management breaks down into understanding what you are trying to do, what your inputs are, what your risks are, and managing them as much or as little as your risk appetite needs.

[9:33] Andrew says contract review usually has the deepest understanding of what is and what is not insured under current programs of insurance. That helps them inform contract owners about what are and are not acceptable levels of risk they can assume in most contracts.

[9:54] Contract review helps to draw out the discussions around the organization’s risk-reward balances that they want to make sure are built into contracts. They can get overlooked in the rush to get a deal done. Contract review wants to bring that balance back to the conversation.

[10:27] Contract review also provides advice on some of the types of risk controls outside of insurance risk transfer that a contract owner should be thinking about, such as cyber, IT controls, data protection, health and safety, and a host of other issues.

[10:49] Contract owners should be thinking about and potentially building into their contracts as part of the negotiation with the counterparty. This is a two-way negotiation. We always want to be thinking about what each party is trying to achieve out of this contract.

[11:16] As risk management professionals, part of our role is to be the grownup in the room while everyone else is rushing to get the deal done. We often have to take a step back and ask if this is the right deal to be done.

[11:32] If it is, what do we need to protect and what value do we bring to the organization if the deal is done?

[11:52] Andrew believes the most important thing a risk professional can do before drafting insurance requirements is to talk to the person who wants the contract. Andrew rarely sees it happen but it is the single most important thing to happen before writing any requirements.

[12:15] Everyone involved needs to understand the purpose of the contract. Why are we doing this? What is being proposed here? What’s the work that needs to be done? What are the services that are going to be delivered?

[12:31] What are the organizational objectives to be achieved by entering this contract? Andrew shares an example from his career of how this is discussed, with a small vendor providing a critical service but who had trouble with the standard contract. Flexibility was needed.

[14:46] If you understand the work or services to be provided in a contract, you’re two-thirds of the way to understanding what risks need to be covered by insurance or another way. If someone’s digging a ditch at your building, they probably don’t need to provide cyber coverage.

[15:40] In cases where you have people moving between sites, you might need to include auto coverage. Workers’ compensation coverage is always something you need to think about. You don’t want to end up being on the hook if a contractor is injured working for you.

[16:19] Some things may not just need to be in our insurance provisions within a contract but also into the liability or other sections of the contract. You need to see the entire contract, not just the insurance provisions within the contract.

[16:48] Plug Time! RIMS Webinars! On November 21st, HUB International returns with the fourth installment of their Ready for Tomorrow series, “From AI to the SEC: The Future of D&O Litigation and Regulatory Exposures”.

[17:07] On November 25th, Resolver returns to discuss

Contract Review’s Role in Risk Management