Insurance Post

Public sector - emerging risks: Built for endurance


With sustainability now a buzzword for central and local governments, Jo Hardcastle looks at the emerging associated risks it brings.

Sustainability, in a broad sense, is the capacity to endure — and this has become a wide-ranging term that can be applied to the environmental, sociological and economic dimensions of the way in which we live.

Central and local governments share both the ambition and the burden of creating genuinely sustainable communities. But the development of such communities through local operations and council services brings with it a whole host of emerging risks, which local authorities must be conscious of when devising and managing activities as well as undertaking operations. Local authorities are already having to consider new areas of insurance risks and liability in the face of the current changing climate, social and economic conditions.

The area most people associate with the theme of sustainability is the environment. Indeed it is the dramatic changes in the environment that have been the main trigger in raising awareness about sustainability.

In the UK, the effects of climate change are manifesting most prominently in increased flooding risk. Nobody will forget the events of June 2007, which left more than 30 000 people across the country homeless. More recently, during November last year, Cumbria faced the brunt of the weather. During both floods, communities were made brutally aware of the increased risk and liabilities flowing from extreme weather conditions with lives being lost.

Extreme events
While these events are extreme, they are prime examples of emerging risks for local authorities; risks that have a low probability and fall beyond their direct control to mitigate but have a high impact. When competing for budgets and attention, those risks with greater probability of occurrence tend to win. But a failure to understand, track and prepare for the lower probability but high-impact risks can lead to a situation in which today's afterthought becomes tomorrow's tragedy.

Are all local authorities prepared if they were suddenly to be hit overnight by the level of flooding previously seen in East Yorkshire and Cumbria? Is the drainage infrastructure within their geographical area sustainable and resilient to the more volatile weather conditions arguably being brought about by climate change?

Moving away from the weather, one of the largest areas associated with environmental sustainability relates to the redevelopment of land. With restrictions on building within greenbelt areas, local authorities and their partners are increasingly redeveloping brownfield sites for the regeneration of urban areas. In the case of Corby Borough Council — recently settled out of court — we have already seen one high-profile example of a local authority found in breach of its duty of care and negligent in its dismantling of the town's steelworks. Eighteen claimants brought the case, alleging that toxic chemicals released into the air caused them to be born with physical defects, after their mothers inhaled them.

The group litigation against Corby attracted much media attention during 2009 and, last month, the council agreed to pay compensation to each of the children without accepting liability. It was claimed that very small particles from the waste material being moved from the steelworks site had been allowed to become airborne over the town and inhaled by the mothers early in pregnancy — at the time the babies' limbs were developing.

Following a three-month general liability trial, judgment was given in favour of the child claimants. It was found that in Corby's management and execution of the land reclamation, involving toxic waste management, the council owed a duty to take reasonable care to prevent this airborne exposure. The High Court accepted the claimants' argument that Corby had breached that duty of care — describing the local authority as having been "extensively negligent" in its control and management of the site.

Sustainability also includes economic and social dimensions, areas where local authorities are once again at the forefront. For example, they play a large part in strategically planning and commissioning children's services and a key development — already being rolled out by local authorities within communities across the country — is the extended schools programme and 'sure start centres' regime.

Insurance for schools is currently provided based upon an assessment of risk of the normal educational activities of an individual school. The range of activities now being offered through the extended schools programme far exceeds the standard educational activities traditionally offered and is, therefore, likely to result in new risks arising for them. It is essential that local authorities ensure adequate and appropriate insurance is in place for all activities and services provided.

Highways and travel
Another key area for local authorities that falls within the economic and social dimensions of sustainability is responsibility for highways and travel. The aim is to enable people to travel more sustainably between their homes, services and jobs. Cycle routes are a prime example. Local authorities are being expected to design and install more cycle routes across their areas, extending and improving the greener travel infrastructure that potentially brings new and wider liabilities.

Cycle routes carry risks in themselves. A number of fatal accidents have already occurred at junctions between cycle paths and roads, raising debates over signage, barriers and sight-lines. The design and installation of certain types of cycle barriers have also proved problematic as a style that suits cyclists but may present hazards for others, such as pedestrians or wheelchair users. Disputes are also increasing as to potential dangers arising from structures abutting cycle routes and the potential risks these present given the increased speed at which cyclists are travelling compared to pedestrians.

Control and responsibility for the design, installation, management and maintenance of cycle routes tend to be complex — involving numerous departments both within the local authority and with external partners and cycling organisations. With more routes being created by nearly all local authorities, it is important that all associated risks are identified and controlled appropriately with a clearly defined allocation of responsibility.

Jo Hardcastle is a legal executive in the public sector unit at Langleys

Getting fit for purpose - Find out more about how local authorities can best tackle emerging risks.

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