SURVEY: 'back end' of risk management being ignored


Two-thirds of businesses do not have risk-management policies covering dispute resolution, despite the fact that commercial disputes cost UK plc an estimated £33 billion each year, research has revealed.



London firm Nabarro surveyed 100 in-house lawyers and managers working for a mix of small and large, public and private sector organisations on their company's risk-management strategies. It found that, although 78% of respondents had risk-management policies in place, only one third of those policies covered dispute resolution.



Jonathan Warne, head of commercial dispute resolution at Nabarro, said it was 'worrying' that companies were ignoring the 'back-end' of risk management.



'Risk management covers three areas - how to avoid a dispute, how to manage a dispute and how to resolve a dispute,' he said. 'It is the back-end that policies do not cover. You should make sure the whole system is joined up.



'Disputes, in one form or another, are inevitable. It is important to have an effective risk-management policy in place to protect your organisation. This should include clear, practical dispute management procedures. Not only should this help minimise the risk of disputes arising, but it should also provide a framework for dealing with them when they do.'



While almost 90% of respondents said senior management cited damage to their company's reputation as the primary concern when handling disputes, 50% of those surveyed blamed ineffective risk-management procedures for causing disputes. Eight in ten disputes were caused by poor communication, poorly drafted contracts or mishandled projects.



Anita Rice