Effective risk management is important in all forms of procurement but is particularly so for PF2 contracts. However, in the past, under PFI, the risk allocation has not always offered value for money. Under PF2, changes to the risk allocation will be made to improve value for money through:
• the greater retention and management of certain risks by the public sector, such as the risk of additional capital expenditure arising from an unforeseeable general change in law; and
• amendments to the current provisions that set out the arrangements for risk sharing of core required insurances in the operational phase of projects, so as to allow the public sector to take a more appropriate share of risk and reduce the contractor's need to build up reserves against increases in insurance premiums.