Sometimes collaboration in various forms can open up new opportunities. I know. But…
You know you can make plenty of mistakes all by yourself, but to get into a real mess you need help. Partnering allows your business to suffer from mistakes over which you have no control and may even know nothing about. If you are in, or are about to go into, a partnering arrangement and think this statement is an exaggeration, try answering the twelve questions in this article and think again. Then think how you are going to control the risks. . unless you really want to live dangerously.
“Partnering” is a word that has many meanings. Here I am using it to refer to an arrangement where two or more businesses or other organisations work together on a project but remain separate entities. It seems to be growing in popularity and is encouraged by many government agencies and other influential bodies, as it can be a means of making use of the expertise and resources of more than one body to achieve some desired objective. There are many success stories, but the failings and pitfalls are not always so well publicised.
Is your business at risk? Here are twelve questions to ask yourself now about your partnering arrangements to see how well the risks are being managed. Or leave it until something goes wrong before asking them, if you really like living dangerously.
- Do you know what are your responsibilities and what are those of your partner organisation?
- How are risks managed in both/all bodies concerned? Does it matter if there are different approaches?
- Does the partnership or joint body exist in itself? Should it?
- Is there separate insurance for the risks of the partnership? If not will your insurers cover the joint risks?
- Who manages the joint risks?
- If a claim arises, who decides which party is responsible for dealing with it and for paying any costs?
- How satisfied are you that all parties concerned are capable of managing the additional joint risks as well as their existing ones?
- How will any failings by the other party affect your business? Legally? Financially? In terms of your reputation?
- What are the arrangements for termination? Could a “divorce” be messy and expensive?
Now let’s say you have answered all the above and are satisfied. (Go on – let’s just say it!). Now ask two more questions:
11. Have the other partners considered these questions and are their answers the same as yours?
12. Are you sure you all have the same understanding of the risks and the controls?
Now there is just one final question:
13. Do you think you need the services of a Risk Management consultant:
– To review your risks?
– To review the risks of the joint body?
– To oversee the whole arrangement?
– To manage disputes between the parties?