Risk Management

Managing Risks of Errors & Omissions

Managing the Risks of Error & Omission claims

Have you ever asked yourself, how could I possibly make any mistakes? I am so experienced and well qualified. I have been doing this job for so long, I have never had an issue before. Then ask yourself if any of the following could possibly occur to you because it is usually these issues that will lead to mistakes or oversights occurring:

  • Time Pressure
  • Not enough knowledge (and failing to ask)
  • Feel the need to always keep the client happy
  • Failure to manage
  • Being un-organised
  • Dishonesty
  • Communication Problems

Claims can come out of all these various areas. So what should you consider to deal with these.

Time Pressure

How well do you plan your day? Have you developed good Time Management skills where you able to prioritise your work  effectively. Do you use a “things to do” list? When you have done so do you stay focussed and disciplined on these tasks?

The use of file notes where communications for both meetings and telephone calls are recorded are one of the single most important ways of defending yourself against a claim, but many skip doing these regularly, taking too brief a note of their discussions simply because of time pressures. This activity needs to be given top priority in a professional’s work process.

Lack of Knowledge

It is important to know the products or services you are providing. Do not guess the answer if you do not know. Admit you cannot say for sure but you will find out and get back to the client. Utilise the technical resources available through your professional associations. Attend some of their seminars or courses. Engage technical experts in the area externally or internally. A highly regarded mentor of mine told me the secret to his business being successful was that he always hired people that knew more than him. Many business leaders are too insecure or paranoid to allow more knowledgeable staff  work for them as it may undermine their position. They feel threatened.  However why not create this extra expertise in your organisation? It may prevent a loss and grow the business more.

Keeping the client happy

That “yes” man to clients or the response “of course we can do that” will get you into trouble one day. It can lead us to giving the wrong information so that they will not get angry. You want to give them a really good price but that could mean cutting corners. You may agree to take on something you do not have the skills or resources for. We all want more business. We all want to get along with our clients. However a truly professional person will have integrity and will be straight and honest with their clients. That really is what client’s want to hear. They want someone reliable and that they can trust. Even if this means you lose the client, then let someone else have the problem.

Failure to manage

Many managers are under enormous pressure to pass more work on to staff otherwise they are criticised for being a “Control freak”.  While we would all like to delegate more work to staff, you need to make sure they are adequately trained and competent.  We can be encouraged by the enthusiasm and confidence of the Gen Y generation but do they really know enough? You need to encourage a learning environment where knowledge is shared and discussed, Create a good communication flow between staff on a regular basis  where workloads can be tracked and meetings held where issues can be discussed, they can provide status reports. You should establish internal systems where there are clearly defined work practices, availability of Procedure Manuals and perform regular audits on randomly selected files.

Being un-organised

Keeping your data secure and in an orderly easy to access system is paramount. When files are needed in any situation, it is not an acceptable excuse to say a file cannot be found. To prove you never received these instructions from the client  is not helped by files being out of order or not in chronological order.

Rarely is there any such thing as a paperless office but many strive to scan all documents and file them. Which if done well is a great thing. It certainly helps with speed and efficiency.  However sometimes complacency or work pressures cause delay to keeping up to date with the scanning. Staff get lazy in filing correctly or the scanning gets left to be done. Considerable risks can arise out of this.

An office needs to cope with the Paper flow and one of the best ways to do this is making sure a methodical system is in place, that is given a high degree of importance and priority within the office. Also checklists are useful to keep track of where issues are at and should be mandatory for all situations.


Sadly, many professionals see the need sometimes to act dishonestly and this can be as a result of the matters discussed above. However all professionals have a duty of utmost good faith that they have to give to their clients.

The Australian Consumer Act as well as all the state based local acts have a requirement not to be deceptive and misleading in your dealings with your clients. A breach can lead to significant fines and penalties along with requirements to pay compensation.

While you may not be directly dishonest yourself, you can be vicariously liable for the dishonesty of your staff. So once again vigilance is needed from the professional to ensure that at all times, all within the organisation need to act honestly in all their dealings.

Communication Problems

The lack of any proof in writing or record of your dealings or discussions with clients is one of the biggest areas that an allegation can be proven against a Professional. The use of file notes whether a numbered duplex pad where a copy is placed in a file, or an on-line facility or even the old fashioned day book where communications for both meetings and telephone calls are recorded are one of the single most important ways of defending yourself against a claim. This activity needs to be given top priority in a professional’s work process.

The file notes need to be correctly filed or recorded in a manner that gives legitimacy to any defence of allegations that instructions were not followed or given. This should include confirming all meetings with clients, making continual notes and records of any face to face or telephone dealings and confirming all instructions or actions back to your clients in writing.

Keeping your clients constantly informed throughout your dealings or tenure with them will ensure better protection of any allegations of a lack of communication.

Throughout all communication processes, they need to be kept clear and un-ambiguous along with being as concise as possible to encourage these to be read and followed.

In conclusion

While we do not have all the answers for preventing errors and omission claims that could be made against you, the matters discussed above and the implementation of well thought out procedures and systems will go a long way to reducing the chance of a loss against your business. Appropriate management of time, communications and staff require constant vigilance and refinement. In return you will be rewarded with a reputation of expert professionalism, decreased number of hours devoted to dealing with problems or issues and ultimately lower professional indemnity premiums.

Who can help?

Cooper Professional Risks (CPR Insurance Services) have the expertise to provide advice about these areas of risk to your business. We can perform reviews and audits of your systems and procedures and make recommendations on how to improve your risk of errors and omissions. So call us, as  CPR we are experts who will save you! 

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