SayPro Allocation of Risk

Contractual risk transfers are intended to assign responsibility (financial or otherwise) for associated risk exposures to one party or the other. Contractual risk transfer can relieve the person or organization originally responsible for the risk by assigning it to one or more of the contract’s counterparties (the "transferees"). Within a contract, risk transfer is primarily accomplished through a combination of indemnification/hold harmless, limitation of liability, and waiver of subrogation clauses. Unless specific circumstances dictate a Harvard procurement manager fully accept the financial consequences for a negative event, it is highly recommended that contracts be structured to allocate responsibility for risk to the party that creates it and/or is best positioned to mitigate its impact.Indemnification/Hold Harmless. An indemnification clause obligates one party to compensate the other party for losses or damages caused by that other party. In its purest form, indemnity is intended to save a party from the legal consequences or from the outlay of money for defense costs, damages, etc. thus shifting all or partial responsibility for payment to the party who caused the damages. Indemnification clauses are often closely tied to representations or warranties, which are promises that specific things are a certain way.Limitation of Liability. Sometimes referred to as a damages cap, it seeks to limit the amount payable in damages on a breach, restrict the types of loss recoverable or the remedies available, or imposes a short time frame in which damages are recoverable. It is common to base the cap on a percentage of the value of the contract.Waiver of Subrogation. An agreement between two parties in which one party agrees to waive subrogation rights against another in the event of a loss. The intent of the waiver is to prevent one party’s insurer from pursuing subrogation against the other party. Subrogation occurs when an insurance company pays its insured and then sues the entity or person responsible for the loss to recover the amounts paid to their insured.Please visit our website at www.saypro.online Email: info@saypro.online Email: info@saypro.online Call: + 27 11 071 1903 WhatsApp: + 27 84 313 7407. Comment below for any questions and feedback. For SayPro Courses, SayPro Jobs, SayPro Community Development, SayPro Products, SayPro Services, SayPro Consulting, and SayPro Advisory visit our website to www.saypro.online