Intelligently Shared Risk in Infrastructure Spending

Public-private partnerships offer a way forward for infrastructure investment. To replicate Canadian successes, the U.S. must address risk management issues.
By: | May 15, 2017 • 3 min read

One of the few national issues on which there is near-universal agreement is the state of roads, bridges, dams, airports, and railroads in the U.S. – invariably described as “crumbling.”

There is also broad bipartisan consensus on the need and indeed value of capital spending. The devil is in the details, as liberals tend to favor big-ticket government-led projects while conservatives advocate varieties of tax credits and other private-sector inducements.

Public-Private Partnerships (P3s) seem like a proven way to bridge the gap and actually get things done. The approach has been highly successful in Canada, and also to a modest degree in the U.S. A program across Pennsylvania to rebuild rural bridges is a notable example.

For all their many attractive features, P3s raise several important risk and insurance questions. At the tactical level, builders risk and surety bonding have to be reassessed project by project.

More strategically, the success of P3s has been built around the essential element of tying operational and maintenance costs and revenues into the capital expensive of design and construction.

Those risk management questions were addressed at a seminar May 10 in New York held by law firms, the U.S.-based Haynes & Boone and Gowling WLG, based in Canada.

“The models tend to look at P3s in just two ways,” said Gilbert D. Porter, partner with Haynes & Boone in New York.

“Either the availability/capacity concept, where payments are made regardless of use, [such as if private investors fund part of a hospital or school] or the performance-based or concession model where there is right to operate but revenues come from use [such as for a toll road or light-rail system].


“The problem with the second is that it often confuses elements of appropriate market risk and government responsibility. What needs to be explored is some sort of sharing of risk, versus just allocating.”

Porter explained that the appeal of the concession model is because it is often non-recourse to the government unless the government takes actions that could be considered competitive or otherwise detrimental to the concession. That is where disputes and litigation arise.

“But there are ways of sharing risk that do not lump it all one way or the other. One example is a collar, where a minimum return is guaranteed by the government (if availability standards are met) and there is a sharing of upside return between the project sponsor and the government.

“That is just one idea, but if in the U.S. we are going to continue favoring the concession model (as opposed to the availability model that is prevalent in Canada) then all parties — government, investors, and contractors — have to start thinking about ways of sharing risk in ways that balance the strengths of the private sponsors with governmental responsibility.

“Otherwise you just end up trying to push risk onto the private sector. And private sector is going to find ways to push back.”

According to data compiled by Gowling, the majority of P3 projects in Canada over the past 15 years have been in health care, with the next most in transportation.

Darryl J. Brown, partner with Gowling, noted that before the P3 approach became common in Canada, roughly half of government infrastructure projects were completed over budget and a year late. Of the P3 projects identified, about 97 percent were completed on time and on budget.

Gregory DL Morris is an independent business journalist based in New York with 25 years’ experience in industry, energy, finance and transportation. He can be reached at [email protected]

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Janet Sheiner, VP of risk management and real estate at AMN Healthcare Services Inc., sees innovation as an answer to fast-evolving and emerging risks.
By: | March 5, 2018 • 4 min read

R&I: What was your first job?

As a kid, bagging groceries. My first job out of school, part-time temp secretary.

R&I: How did you come to work in risk management?

Risk management picks you; you don’t necessarily pick it. I came into it from a regulatory compliance angle. There’s a natural evolution because a lot of your compliance activities also have the effect of managing your risk.

R&I: What is the risk management community doing right?


There’s much benefit to grounding strategic planning in an ERM framework. That’s a great innovation in the industry, to have more emphasis on ERM. I also think that risk management thought leaders are casting themselves more as enablers of business, not deterrents, a move in the right direction.

R&I: What could the risk management community be doing a better job of?

Justified or not, risk management functions are often viewed as the “Department of No.” We’ve worked hard to cultivate a reputation as the “Department of Maybe,” so partners across the organization see us as business enablers. That reputation has meant entertaining some pretty crazy ideas, but our willingness to try and find a way to “yes” tempered with good risk management has made all the difference.

Janet Sheiner, VP, Risk Management & Real Estate, AMN Healthcare Services Inc.

R&I: What was the best location and year for the RIMS conference and why?

San Diego, of course!  America’s Finest City has the infrastructure, Convention Center, hotels, airport and public transportation — plus you can’t beat our great weather! The restaurant scene is great, not to mention those beautiful coastal views.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

The emergence of risk management as a distinct profession, with four-year degree programs and specific academic curriculum. Now I have people on my team who say their goal is to be a risk manager. I said before that risk management picks you, but we’re getting to a point where people pick it.

R&I: What emerging commercial risk most concerns you?


The commercial insurance market’s ability to innovate to meet customer demand. Businesses need to innovate to stay relevant, and the commercial market needs to innovate with us.  Carriers have to be willing to take on more risk and potentially take a loss to meet the unique and evolving risks companies are facing.

R&I: Of which insurance carrier do you have the highest opinion?

Beazley. They have been an outstanding partner to AMN. They are responsive, flexible and reasonable.  They have evolved with us. They have an appreciation for risk management practices we’ve organically woven into our business, and by extension, this makes them more comfortable with taking on new risks with us.

R&I: Are you optimistic or pessimistic about the U.S. health care industry and why?

I am very optimistic about the health care industry. We have an aging population with burgeoning health care needs, coupled with a decreasing supply of health care providers — that means we have to get smarter about how we manage health care. There’s a lot of opportunity for thought leaders to fill that gap.

R&I: Who is your mentor and why?

Professionally, AMN Healthcare General Counsel, Denise Jackson, has enabled me to do the best work I’ve ever done, and better than I thought I could do.  Personally, my husband Andrew, a second-grade teacher, who has a way of putting things into a human perspective.

R&I: What have you accomplished that you are proudest of?

In my early 20s, I set a goal for the “corner office.” I achieved that when I became vice president.  I received a ‘Values in Practice’ award for trust at AMN. The nomination came from team members I work with every day, and I was incredibly humbled and honored.

R&I: What is your favorite book or movie?

The noir genre, so anything by Raymond Chandler in books. For movies,  “Double Indemnity,” the 1944 Billy Wilder classic, with insurance at the heart of it!

R&I: What is your favorite drink?


Clean water. Check out for how to help people enjoy clean, safe water.

R&I: What’s the best restaurant at which you’ve eaten?

Liqun Roast Duck Restaurant in Beijing.

R&I: What is the most unusual/interesting place you have ever visited?

China. See favorite restaurant above. This restaurant had been open for 100 years in that location. It didn’t exactly have an “A” rating, and it was probably not a place most risk managers would go to.

R&I: What is the riskiest activity you ever engaged in?

Eating that duck at Liqun!

R&I: If the world has a modern hero, who is it and why?

Dr. Seuss who, in response to a 1954 report in Life magazine, worked to reduce illiteracy among school children by making children’s books more interesting. His work continues to educate and entertain children worldwide.

R&I: What do your friends and family think you do?

They’re not really sure!

Katie Dwyer is an associate editor at Risk & Insurance®. She can be reached at [email protected]