Effective risk management helps provide confidence, streamline operations, enhance safety, and protect your business. In addition, a risk management plan helps ensure that everyone on your team is on the same page, and it helps lower insurance costs.
Common risks construction companies face include safety, financial (lack of sales, cash flow, etc.), legal, project (delays, poor management, etc.), and environmental (floods, storms, etc.). However, every business and project has its own unique set of risks, and it’s imperative to identify risks relevant to your company and your current project.
As we said earlier, every business has its own unique set of risks. What may be a concern for your business may not be for another construction company. Therefore, once you’ve identified all of your risks, you need to prioritize them. To do so, look at 1) how probable each risk is and 2) what impact each risk would have on your business. Those risks with the highest probability and the greatest impact should be considered a high priority.
Once you’ve identified your risks and which risks are the most probable and could have the highest impact on your business, it’s time to determine strategies to respond to those risks. There are four potential responses:
A risk management plan is a written document that provides information to team members. It includes your risk assessment, strategies, monitoring and reporting, contingencies, and responsibilities.
As we mentioned earlier, the right insurance allows you to transfer certain risks to a third party. However, insurance policies should be looked at as a safety net.
For example, it’s usually wiser to provide a safer work environment to minimize employee injuries than to deal with lost workdays, lower employee morale, potential lawsuits, and higher insurance premiums - even if you have the proper insurance to cover the financial losses of an employee injury.
Here are three examples of how Insurance can be used as a safety net:
The easiest way to lower your construction insurance costs is to work with one of the experienced agents at American Insuring Group. Not only do we specialize in Contractors Insurance, but we also research insurance plans from multiple companies to find quality protection at the lowest price.
So give us a call today at (800) 947-1270 or (610) 775-3848, or connect with us online.