Keep contractor risk management in mind before signing contracts
Mar 30, 2014
In many discussions about the external risks posed to businesses, a lot of focus is directed to vendors in corporate supply chains. However, companies often do not think about the threats that their service providers and subcontractors can present. For instance, contractors that fail to observe safety practices could make the companies that hire them liable for any damages or injuries caused.
"A good rule of thumb: before signing any contract that requires you or a contractor to accept liability, step back and think about how your business would be affected if something goes wrong," writes Charlie Pugliese for the Maritime Reporter. "Is your business properly protected? What factors should be considered when requiring a contractor to sign these types of agreements?"
Although Pugliese, leader of Ocean Marine Hull and Liability practice of Travelers Insurance, was speaking specifically about the insurance risks contractors pose in maritime industry, his advice is relevant to other sectors as well. Before signing any contract for services, companies need to consider and how a contractor's failure to observe safety laws and other regulations could negatively impact the company.
A business can put itself at risk for operational disruptions, employee and subcontractor injury, reputational damage, and more when it does not properly vet contractors that perform services on its behalf. Contractor pre-qualification services by BROWZ can help companies reduce their liability and risk by ensuring their contracted partners comply with safety and industry regulations.