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Can saying “I’m sorry” Manage Risks?
By Kevin Quinley, CPCU, ARM AIC, AIM, ARe © 2009

Dyanclaim for Claims Websites

A recent article in Business Week's SmallBiz magazine (August/September 2009, “Oops!,” p. 22) contained a snippet on business etiquette and the art of making a business apology. Business apologies can sometimes be not only a matter of etiquette, they can be matters of risk management and claim prevention. It is well-known in the realm of medical malpractice, for example, that many patients bring claims simply because they are ticked off that no one has taken the time to explain to them what happened and what went wrong. Many times, injured persons say that all they wanted initially was someone to say, “I’m sorry,” and if that had happened, they would not have pursued a claim or not have pursued it has doggedly.

As a result, many medical malpractice programs have embraced risk management initiatives which feature apologies and explanations as a way of heading off claims. Usually are carefully worded so as not to constitute any admission of liability or fault. There may be applicable in realms of risk and liability beyond medical malpractice.
SmallBiz offers tips on how to make a business apology without creating legal liability:

• Start with, “I’m very sorry that this has happened” Note: this does not a knowledge any negligence or liability.

• Be concise. Do not go into detail or sound like you are making excuses.

• Be prompt. Don’t delay. The quicker you can apologize and expressed regret for a situation, the better chance you have of nipping a potential claim in the bud.

• Ask, “What can we do to make it right?” Use that as a starting point for negotiation.

• If the other party is threatening to initiate litigation or you are concerned that litigation may be in the offing, do not send a written apology.

• Even if the problem is not your fault, apologize for the situation and try to make amends. The determination to “be right” can get the best of many people and trigger costly claims. Even meritless claims may consume thousands of dollars in legal fees and hundreds of man-hours to defend.

Making an apology is not necessarily appropriate in every situation. It may be more appropriate, however, in many more situations that many risk managers might consider.

One caveat: the risk manager and risk management department should not make an apology without prior counsel and coordination with the company’s Legal Department. Further, if the matter in question in any way impacts insurance company dollars, the risk manager should tread cautiously and get prior clearance and buy-in from the insurance company. Without such clearance and buy-in, the risk manager should probably refrain from any apology program. The last thing the risk manager wants is to jeopardize the company’s insurance coverage by breaching a policy condition, since many insurance contract conditions prohibit policyholders from accepting liability.

Sometimes in risk management as in life, no good deed goes unpunished.

In the 1960s tearjerker movie and novel, “Love Story,” the tagline was, “Love means never having to say you’re sorry.”

That may be true in love but it may not be true in risk management. In certain circumstances and situations, apologies may be legitimate risk management tools not only to retain valued customers, but to forestall expensive and time-sucking litigation.

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