Construction companies face various risk management challenges, including natural disasters, financial obstacles and restructured insurance programs.
A recent Business Insurance article shares the following concerns from risk management experts regarding the construction industry.
- Subcontractor viability. Subcontractors are feeling pressure from inflation, material and labor shortages, and supply chain and logistical challenges, which is creating significant financial challenges and causing some companies to go out of business.
- Severe weather events. Such events are a significant risk for companies working on projects in areas prone to catastrophic weather, which threatens structures being built, materials and construction equipment. There also is concern regarding how insurers will respond to damage claims. Risk managers should understand what is covered by insurance and have a crisis response plan ready.
- Shortage of skilled workers. As the number and size of construction projects increase, the need for hiring, training and retaining skilled and experienced workers is crucial.
- Auto liability. Although construction insurance rates reportedly are fairly stable, auto liability continues to experience rate increases. Auto physical damage claims are being affected by rising labor and parts costs and extended repair times.
- “Mega projects.” These massive multiyear and multibillion-dollar construction projects are complicated and expensive. For example, advanced facilities such as data warehouses often require sophisticated fabrication machinery, which can be a potentially costly exposure if not managed correctly.
Experts highlight the importance of technological innovation in improving safety and collecting data that can help combat risks in the industry.
