General Counsel as Risk Manager

One of the functions migrating into corporate law departments is risk management, including assessing the company’s insurance requirements and purchasing adequate insurance coverage. While companies may purchase a variety of insurance policies, the ones most likely to benefit from legal department review include commercial general liability, data privacy and cyber-risks liability, errors and omissions liability, director and officer liability and, in some cases, fiduciary liability and/or employment practices liability.

The types of companies that need professional risk managers are those which face major physical exposures, either on the first-property or the third-party liability side. A typical small- to medium-size company rarely needs to hire a risk manager. What makes sense for virtually any law department is to appoint a specific attorney, an insurance point person, to take responsibility for insurance issues.

This article explains the various tasks relating to insurance, and which should be handled by the insurance point person, the broker and outside insurance counsel respectively. The authors suggest initiating a broker selection process. Even if a company ends up remaining with its existing broker, it will have learned a lot through the process.

Insurance policies are contracts. Getting to know your insurance contracts is a worthwhile effort. The risks which can be mitigated or even eliminated by proper attention to these contracts make it worth the time it takes to learn about them and about how to purchase the best possible contract for the company.