Compensation Culture: Risk Aware, Not Risk Averse

I’ve typed the words compensation culture so many times that I think I may have given myself RSI (geddit?).  Rather then type it whole lot of other times let me just link you to this article by an esteemed bunch of legal academics Simon Halliday, Jonathan Ilan and Colin Scott, investigating risk management in public authorities, and quote their abstract in full:

Contemporary discussions of the relationship between negligence liability and the provision of services by both public and private organizations frequently suggest the emergence of a ‘compensation culture’. Despite empirical evidence that compensation culture claims are somewhat inflated, an anxiety persists that risks of tortious liability may still undermine the implementation of public policy. Concerns about the potential negative effects of liability on public administration frame the problem in various ways. First, there is an anxiety that public authorities may overreact to liability risks by becoming excessively risk averse. Secondly, there is a fear that compensation claiming will divert financial resources away from service delivery and towards the payment of insurance premiums and compensation awards. Thirdly, there is the fear that insurance companies will, as ‘risk bullies’, curtail public service activities. And, finally, there is the suggestion that risk management, including legal risk management, is becoming the dominant mode of government decision-making to the exclusion of professional judgement. This article addresses these concerns through a set of empirical case studies about the management of liability risks associated with road maintenance services. Although our findings suggest that public authorities respond to liability risks in a variety of ways, we found only limited evidence of the above concerns. In general terms, it was a case of public authorities being risk aware and responsive as opposed to risk averse.


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