This Risk Byte provides an introduction to contractual risk management for transport operators. Whether you are using a house bill of lading (HBL), standard trading conditions (STCs), or are being presented with a new contract for your consideration by a customer, this document aims to explain how you should contract with your customers and subcontractors to minimise risk.

What is contractual risk management?

Contractual risk management refers to the steps you take to protect your business when entering into contracts with your customers or subcontractors. You achieve this by negotiating contracts that are fair, reasonable and which describe clearly the duties, responsibilities and liabilities of each party.

When appointing subcontractors, it also means ensuring they are reputable and suitably qualified to undertake the services you need. You should endeavour to contract with them on the same terms as those that apply between yourself and your customer, ensuring “back-to-back” liability. Check too that they have adequate insurance to recover losses should your customer suffer a loss because of the subcontractor’s negligence.