Risk managers are increasingly using software to ensure they’re mitigating the risks in their organization. This is especially true in the construction industry, as these organizations face a larger variety of risks than most others.
Risks such as employee injuries, on-site accidents, automobile incidents, and property damage are only a few examples. A successful risk manager must be aware of all these risks and must be able to respond timely to each one.
This post will focus on the construction industry and the risks faced by general contractors. This is by no means an all-inclusive list, but here are some key risks those in the construction industry should be aware of and what to do about them.
5 Construction and Contractor Risks
1. Employee injury
Employee injury is one of the greatest and most obvious risks for the construction industry. On a regular basis, employees face hazards such as trips, slips, falls, crushing, and pinching. Death or serious injury may also occur with improper use of heavy machinery.
Some risk management techniques to help mitigate these risks include:
- Providing safety training and manuals
- Enforced regulations on clothing and proper protective gear
- Regular on-site safety inspections
- Special certifications required for certain jobs
- Working alone and in confined spaces
- Safety training and culture
2. Quality assurance and product liability
Your organization may be held responsible for any issues with performance, including that of subcontractors. This issue extends not only with the quality of work, but the quality of the construction materials as well.
Some key points to consider are:
- Performance-related complaints or lawsuits faced by the organization or subcontractors in the past five years
- Building plans must specify building codes, zoning compliance laws, and public health and safety conditions
- Subcontractor loss histories
- Insurance certificates from all subcontractors and suppliers
- Relationship with and reputation of suppliers, specifically relating to the quality of materials
- Training, experience, and qualifications of employees
- Length of employee shifts and how often overtime is required; work fatigue can lead to poor performance
3. Third-party injury
Aside from employee injuries, contractors must take measures to reduce the likelihood of a third-party injury on-site. These sites are especially an "attractive nuisance" for children.
Consider some of these risk mitigation techniques:
- Create a policy that all visitors, delivery personnel, and other third parties require an escort when entering the job site. All employees must be informed of this policy, and it must be strictly enforced.
- Escorts are to discuss site safety with visitors and require that they take necessary precautions, such as wearing a hard hat.
- Inspect sites daily. Ensure potential hazards are removed and the area tidied.
- Post warning signs throughout the job site and require workers to report when signs are down.
- Erect gated fences around the perimeter of the job site. Employees must report any breaches of the perimeter to the site supervisor.
4. Property risks
The property of contractors is often mobile in nature; it may be transported frequently, leased for long periods of time, or used by different companies. Contractors must have coverage in place in the case of theft or damage.
Some issues to address include:
- The presence of highly flammable materials such as fuel, welding cylinders, wood, or sawdust will greatly contribute to exposure. Are there other flammable substances? Are explosives present on-site? How are these materials safe-guarded?
- How are valuable papers and records maintained? Is an electronic system used? Important papers should be maintained in a fire-resistant safe off-site.
- No-smoking policies should be in effect, with the exception of designated areas with fire-resistant receptacles.
- Fire extinguishers and alarms should be located throughout the job site.
- Are temporary lighting, wiring, and heating systems properly maintained and inspected?
5. Automobile and contractor's equipment liability
Vehicle and equipment exposures include collisions (on and off-site), use of non-owned vehicles, frequent materials and equipment deliveries, oversized and heavy equipment, and travel to unfamiliar areas, to name a few.
Information you must gather to help understand your risks include:
- What are the types, ages, and conditions of the vehicles?
- Are workers expected to use their own vehicle for transportation of personnel, materials, and equipment to and from the worksite? This leads to a non-owned vehicle liability.
- Are other vehicles owned or leased?
- Have all other larger vehicles been equipped with warning devices, such as back-up alarms?
- Are suppliers and equipment dealers within the insured's business areas?
- How much training do drivers require before operating company vehicles? Are special driving licenses required?
While these five contractor risks do not represent all of the risks faced by those in the construction industry, this list does provide a starting point. Asking the right probative questions will help you to assess your risk accurately.
An important part of construction and contractor risk management is ensuring you keep track of your insurance certificates. Know exactly when each expires, sending a notification in advance of expiration, and being able to keep track of them in one space is vital.
This is where ClearRisk’s risk and claims management software comes in. Using the software, insurance certificates can be added directly by email. It will also automatically send notifications to all relevant parties before a certificate expires, ensuring that you’re always covered. Click the link below to learn more:
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