For unforeseen liabilities the calculation should:
- Typically be based on the maximum potential liability as determined by a risk assessment;
- Allow for the scenario where a third party needs to complete the works, to provide for cases where the liability is abandoned; and
- Apply any legally required formulas or default amounts.
In some cases a contingency may be included to allow for costs associated with legal fees/penalties and delays.
The purpose of the risk assessment is to identify and quantify environmental liabilities that may result from incidents, taking into account both the likelihood of an incident and its consequences. The risk assessment should be updated throughout the operational lifetime of a site to ensure it remains relevant to the potential environmental liabilities of the operations.
The risk assessment and calculation may be made by an operator or third-party expert, and may be subject to verification by a third-party expert or a regulator. The extent to which this is done depends on the regulatory requirements and the level of concern about the quality of calculations versus the increasing resource that verification demands.
Key factors to include in costing for unforeseen liability
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Type of Operation |
Costs |
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Unforeseen liabilities |
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