Holiday season is here! Are you ready to provide safer outdoor spaces to your community?

Risk Matters - Summer 2024

From caravan parks and watering holes to music festivals and kids fairs, get ready to manage liability risks during holiday season.

It’s summer! That time of the year when everyone is ready to celebrate and go on holidays. Tourists all across the country and within Western Australia flock to popular spots to relax and enjoy our beautiful state. Unlike locals, visitors don’t always know the things to look out for – the beautiful watering hole that hides rocks and isn’t suitable for diving, the gorge that is a favourite of crocodiles or the walking trails where tiger snakes often sun themselves.

And it’s not just tourist spots like walking trails and watering holes that pose potential risk, but also events such as music festivals, cultural evenings and kids’ fetes that come with a fair share of associated liability concerns. Getting injured by fireworks or trips and falls at a fair are just a few examples.

Every year, members work hard to make their events a success, preparing their tourist spots, and ensuring visitors have a fun and safe experience.

In doing so, members must create a balance between community amenity and the liability exposures that facilities carry. Local governments can safeguard their assets, maintain legal compliance, and manage risks effectively by ensuring that roles, processes, and obligations are clearly defined and executed. The importance of this proper transfer cannot be overstated as this forms part of the foundation of resilient business processes.

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Event organisation also requires a substantial allocation of resources and involves multiple stakeholders, contractors, and interactions with the public. Due to the interconnected nature of these parties, it is essential for local governments to carefully assess and manage the transfer of risk associated with events.

Risk transfer plays a vital role in effective risk management by defining the responsibilities for different aspects of an activity and potential losses. Local governments should establish their own procedures for addressing complaints, identifying hazards, implementing mitigation measures, and clearly communicating interdependencies. This ensures a comprehensive approach to risk management and facilitates effective coordination among stakeholders.

In relation to government assets where local communities are involved, risk management is paramount to ensure safety. Local government statistics from the last 10 years show the number of liability claims LGIS has received and how this has impacted the Scheme in terms of the cost incurred.

Figure 1: Number of claims at public facilities in last 10 years (2013-2023)

Imagine a scenario where a local government is organising an event. It hires equipment and engages security firms for crowd control and protection of the hired equipment. Unfortunately, the hired equipment is stolen, leading to a question of liability for the loss of the equipment.

It is essential for local governments to ensure that insurance provisions are included in their contracts for hiring, leasing, and event arrangements with third parties. These provisions should cover public liability and protection for their own property.

In cases where a contractor is held responsible for injuries, property damage, or other claims, their insurance policy should provide coverage for the associated costs. However, without a clear delineation of responsibilities, disputes may arise between the local government authority and the contractor involved, leading to unexpected legal expenses and financial burdens that they believed they were protected against.

It is crucial for contracts and agreements to clearly outline the entity that bears responsibility under specific circumstances. Additionally, local government authorities should establish easily accessible processes to effectively manage situations following a loss. These processes should include promptly notifying all relevant parties about the loss and taking necessary measures to safeguard any remaining asset.

As part of event planning, local governments should create operational plans that include a crucial step known as a risk and contract matrix. This matrix serves to outline the main areas of risk and determine which party is best suited to assume control and manage each specific risk.

Below is a simplified example of a risk and contract matrix:

Figure 2: Simplified example of a risk and contract matrix

While liability insurance is important, it may not always provide sufficient coverage. Liability insurance operates based on the principle of negligence rather than solely focusing on damage. If the security company has taken all reasonable precautions to protect the equipment, it is unlikely that they would be held liable. In some cases, unfortunate circumstances may occur that are beyond anyone’s control. The avenues for recovery may lie in the contract.

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