The Three Rules Of Construction Risk Management
When we consult with our construction clients, we always try to keep our side of the conversation as effective as possible. We do not try to overload our clients with terms and information they really do not need, because that can make risk management appear to be inaccessible. Our goal is to get our clients completely involved in all of their risk management tasks and help them to understand the importance of what we do for their businesses. To help keep things simple, we have developed the three rules of construction risk management that are used to guide every decision made for every project.
Never Take On More Risk Than You Can Handle
The process of putting together safety blankets in the form of insurance coverage can sometimes make construction companies feel like they can take unnecessary risks just to boost profits. The point of risk management is to reduce the amount of accidents and injuries that occur, and to protect a company if something should happen. Risk management should never be looked at as an invitation to become reckless.
If your company is unable to handle a certain type or amount of risk, then you should not be taking on that risk. For example, if you have a project that requires you to use a crane that is taller than any other crane you have ever used but you intend to save money by using your regular crane operator, then you are taking on more risk than you can handle. Be smart when trying to balance risk with success, and avoid causing yourinsurance premiums to skyrocket out of control.
Never Hide Risk From Your Risk Management Company
There have been times when clients have asked us to help cover the consequences of risk that they had shielded from our view whenever we would do an evaluation of their risk management needs. Sometimes construction companies hide risk because they don’t want to be told how much trouble they are asking for if they try to execute their plans.
The only way a risk management organization can help your company to stay in business and avoid financial disaster is if you share your entire business operation with that management organization. If you hide risk to try and get away with something you know will be a problem, then you are only hurting your own company and your employees.
Always Alert Your Risk Management Company To New Risks
There has been more than one time where we went to do an update to a customer’s risk profile and have seen new risks that were not reported to us. The client did not try to hide these risks; they just simply forgot to tell us.
We can only do our job effectively when our clients alert us to new risks the moment those risks are identified. We understand that it can be easy to overlook something in the fast-paced world of the construction industry, but that is why we always recommend that alerting your risk management company to new risks be part of your regular business checklist.
If construction companies follow the three basic rules of construction risk management, then they will always be protected in the event that something should happen. Following these rules also helps your risk management organization to keep your risk management costs down, which allows more money on your bottom line.