Assessing Risk in Lending and Borrowing

Monday afternoon’s topic covered the very relevant topic of assessing risk in lending and borrowing.
The session was kicked off by our very own Kate Parsons, Head of Collections Management at Tate and Jane Knowles, Chair of UKRG with their presentation:

“I look forward to hearing from you”: A lending and borrowing scenario.

As the title indicates, the session discussed a scenario in which several works were being requested from Tate for an exhibition by the Royal Academy, showing the point of view of both the lender and the borrower. They cleverly illustrated how each party must consider practical, logistical, legal, financial and reputational risks. As is sometimes the case with loan requests, in the scenario this did not go quite as smoothly as either organisation had perhaps hoped, and served to highlight the potential pitfalls when lending and borrowing.

Kate and Jane advocated a risk assessment based approach to lending, which they had found to work well at Tate.

As someone who is relatively new to the Registrar role, the session was really helpful in highlighting the key risks in lending and borrowing, but also the need for both parties to act in the interest of the work(s) and be realistic, practical and flexible when agreeing and implementing a loan. The closing message was one we should all perhaps take note of, that it is increasingly important for the lender and borrower to work together to mitigate risk, to illiminate actual problems as well as perceived ones.

The second fantastic session on the topic was given by Eva-Lena Bergstrom, Department Director at Nationalmuseum, Sweden. Her topic was entitled:

Lending and Borrowing – Calculating Risks.

This session also highlighted the need to remove the barriers to co-operation between museums and to encourage the mobility of collections for public benefit. In order to achieve this, Eva-Lena argued the need to reduce costs, currently so high that they often impede all but the large National museums. She suggested that there were four key issues which could address this:
• Improving indemnity schemes
• Improving valuation processes
• Simplifying risk assessments
• Making transport procedures more reliable and less expensive

The session drew upon the work done in the EU OMC Risk Assessment Group, 2010-2012. The over-riding message was to ask ourselves for what benefit are we acting when considering a loan: the object, the museum, the private interests or the public?

Panel Discussion
Perhaps unsurprisingly these two sessions led to a lively panel discussion which drew upon the Web Poll questions asked prior to the conference about risk assessment. The poll questions concerning uninsured liability sparked the most discussion. The practice of loan agreements asking a borrower to accept liability for damage to a work up to six months after the work has returned was highlighted, in particular the need for wording to be clear to establish if it is referring to any damage, or damage which occurred during the loan that only becomes apparent after its return. The panel discussion ended with the message that we need to recognise that the lender must take on some risk in order to provide access and that we need to shift away from the idea that the borrower must accept all risks.

On a personal note, I had a fantastic time at ERC 2014 and felt that this topic was one of the highlights of the conference. Both sessions drew heavily on the speakers excellent knowledge of the sector, were highly relevant and provoked a great panel discussion.

Many thanks to Jane, Kate and Eva-Lena.