OVERVIEW

Risk management wasn't part of my early education and didn't impact my career as a young engineer. Perhaps that is because I started my career in the late 1950s, a time when litigation was not nearly as profuse as it is today. Furthermore, prior to the late 1950s, the professional liability insurance (PLI) industry was nonexistent. Not until about 1957 was the first PLI program created though the prodding of the American Institute of Architects (AIA) and the National Society of Professional Engineers (NSPE). Because of the lobbying of those two organizations on behalf of their members, who had no reasonable resource for errors and omissions insurance, the CNA Insurance Company PLI program was initiated. CNA is still the PLI program commended by both societies as of this writing.

When the insurance industry began offering PLI to engineers, it had no experience to draw upon in computing appropriate premiums or, more important, in learning the important aspects of defending claims and of developing risk management programs for their insured customers. The insurance industry's body of knowledge has dramatically expanded, and risk management training is one of the constants for the major carriers. They can draw upon nearly 50 years of legal defense experience and have learned much through monitoring outcomes in courts throughout the nation. Now training in risk management is an essential ingredient for managing an engineering firm.

What is risk? Many definitions are available. Some of those found in an Internet search are shown below:

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