Professional liability risk is greater than ever in our world of instant reviews and opinions. CLM Fellow Gawain Charlton-Perrin explains how ethics plays a big role in managing risk for a host of different professionals.
Q. What brought you to risk management and The Hanover?
A. I previously worked at another insurance carrier for seven years, handling risk management for lawyers. While I loved it, I wanted to expand to work on more than just one line of business. At The Hanover, I have been able to work on risk management for accountants, architects and engineers, real estate agents, property managers, home inspectors, and lawyers. It is quite rewarding to have expanded my horizons and learned so much.
Q. What is your overall philosophy to risk management?
A. My view is that professionals cannot avoid risk altogether, but they can take steps to minimize exposures. Preparation, communication, and documentation are three keys to any successful risk management program for professionals. I also believe that ethics play a big part in effective risk management. While the ethical standards may be higher than a typical civil suit standard, if professionals act ethically in their practices, then they will be less likely to have disgruntled clients and will be well served in defending a claim.
Q. What trends are you seeing in professional liability claims and risk?
A. We see a significant increase in cyber-related claims affecting professionals from small consultants to large corporations. Cyber hackers constantly are finding new ways to breach systems. Many of the new methods involve “social engineering,” which often is referred to as “the man in the email.” Professionals have to be wary about emails from trusted partners, customers, and colleagues. Those emails might be from a hacker who has compromised the system and is “spoofing” the email of that trusted partner.
Drones also represent an emerging risk that will affect several types of professionals by raising their risk profiles. The increased risk relates both to the use of the drone itself and the standards that professionals will be held to if they use or do not use a drone in their practices.
Q. You formerly prosecuted attorneys for ethical violations, then defended attorneys charged with legal malpractice. How did this influence your career?
A. My work for the Illinois agency that prosecutes attorneys for ethical misconduct trained me in sound ethical practices that have served me well in both defense of professionals as an attorney and as a risk management director. It really gave me a strong appreciation of the importance of ethics in working for anyone or any company in any capacity. Your word is your bond, so taking responsibility for your actions is crucial in maintaining good communications with clients, coworkers, supervisors, and even opponents.
I saw the downside to otherwise good people who lied or did something unethical. I was taught the importance of realizing that mistakes do not go away. By facing them upfront, you put yourself in the best position to minimize the damage and avoid making situations worse. As they say in politics, “It’s not the scandal, it’s the cover-up.”
Q. Do you think the world is becoming more or less risky?
A. In many respects, the world appears far less risky for professionals. We have computers to keep track of our calendars and notify us about important deadlines. We can obtain information at the touch of a button on a smartphone or tablet. We can be far more efficient in word processing tasks. Letters do not have to solely rely on the post office because we can send messages and documents via email. We can communicate more efficiently and more often than in the past.
However, technology has created new risks—or, rather, the same risk in a different format. Calendar systems are only as good as the deadline dates that are put into them, and they cannot help a professional who ignores or forgets to respond to a reminder. Too much reliance on technology can backfire if a professional doesn’t have the right systems and safeguards in place. In addition, clients are far less patient about the work product of their hired professionals. We work in a society in which immediate responses are expected. Professionals may have less staff to help with projects and actually be doing far more than in the past. Mentoring of young professionals is not as common as it used to be. This results in less experienced professionals handling projects for clients on their own with an increased risk of making a mistake.