Why Not Take The Risk?
You run a small construction company and you know that an upcoming project is going to require a new type of safety equipment. You could be fined if you do not use the equipment, but the fine would not be nearly as expensive as buying the new equipment. So why not take the risk and save some money?
Your Company’s Reputation?
Knowingly assuming risk has financial implications that go beyond fines and the cost of new equipment. If you do not invest in the new equipment and a worker gets hurt, then future job owners are going to look at your company as being reckless. If a worker gets killed because you tried to cut a few corners, you may never be able to find work again.
It always surprises us how many of our clients consider taking a few risks to be acceptable because of the small fines that could be involved. What most of these construction companies fail to take into account is the potential for costly lawsuits. Yes, we can set you up with liability insurance that can help you to weather lawsuits due to your desire to cut corners, but only for so long. If your company is known as one that has a lot of lawsuits, then you become a bad risk and you may not be able to get the liability insurance you need to stay in business.
Attracting Top Talent
The construction industry is running out of workers and it is getting harder and harder for companies to find the skilled workers they need to complete projects on time and on budget. If your company gets a reputation for cutting costs potentially at the risk of injuring workers, then you are not going to be able to attract the talent you need to grow your business.
We touched on this earlier, but it is a topic worth focusing on for a little while. When your company takes unnecessary risks, you rely on your insurance to bail you out. But if you keep taking risks, especially against the advice of your risk management experts, then you will find that your insurance costs will continue to go up. As we mentioned before, the end result is that you will not be able to get the insurance you need to stay in business and that means closing your doors for good.
After pointing out all of these intangible consequences to assuming risk, we hope that everyone understands just how much money a company saves when it invests in the right kind of risk protection. The money your company spends on insurance, good equipment, and qualified safety personnel will save you thousands (possibly millions) in insurance fees, worker costs, and legal settlements.
It is tempting to take risks in the construction industry because company owners can see that extra profit on the bottom line when they cut costs. But the biggest mistake a construction company can make is being too short-sighted in its decision making and doing things that could ultimately put the company out of business.
Focusing on good risk management is not just good business, it saves your company money. When it comes to deciding on whether or not to take a risk, the answer should always be “no.”