As an initial premise, change in law risk falls to the private party. However, government may decide where their assumption of this risk will result in better value for money.
In determining which approach should be adopted to allocate or share change in law risk in a particular project, each of the following considerations should be addressed:
• methods available (if any) for mitigating the consequences of the risk
• the source of the risk (which in turn is linked to the power to control it)
• the nature of the risk and its consequences - i.e. whether it is a general change in law or one which specifically affects the project or the service sector, and whether the consequences are significant.
These are discussed in turn below.