Shock Loss: How to Redefine your Risk Profile in a Post-COVID Market
With the high risk involved in construction, shock losses from large claims can make it difficult to get affordable insurance. With the post-COVID world on the horizon, however, it’s important to identify your current risk profile and create an actionable plan on how to keep it down.
At Competitive Edge Insurance, our team is dedicated to your safety, security, and ongoing success. Our clients stay with us for decades because we insure them no matter the market condition. So, let’s chat about redefining your risk profile in a post-COVID market.
Setting Your Project Up
There are a number of steps a project manager can take to minimize potential risk. Here are a few of our recommended best practices.
Scope of Work
Defining and creating a detailed scope of work for each project will result in more accurate bidding, precise timeframes, and fewer modifications down the line—all resulting in fewer opportunities for claims.
Employ a qualified legal expert. Your project’s scope should include key dates, milestones, and the resolution process in the event that obstacles arise.
Employing a professional will help eliminate ambiguity between parties and establish a mutual understanding of what’s expected from one another. Allow sufficient time for the scope to be thoroughly defined.
Keep It Professional
Although the financial save might be tempting, always use qualified professionals in your construction work. The quick dollar you might save, after all, will be minute compared to a shock loss claim you could receive as a result of carelessness.
It’s All in The Details
Project plans, including design, drawings, and specifications, need to be detailed. This will reinforce the necessity of clear communication to avoid shock loss. All parties involved should have a thorough understanding of the site’s initial condition and where it will stand at each point in the project.
Roles and Responsibilities
Identify everyone involved whether it be a project manager, stakeholder, etc. Answer this question: What is each party’s role or responsibility in the project? Make it clear who has the authority to grant extensions, resolve issues, submit and approve change orders, and so on. This will increase efficiency and minimize claim occurrence.
Although there are many, the most frequently noted risks faced by a hiring company include:
- Job site accidents
- Project execution delays
- Exceeding the delegated project budget
- Not receiving a warranty from a contractor
- Risk in receiving poor quality products
- Poorly defined scope or poorly written contracts
- Unknown site conditions
- Damage or theft
- Poor project management, including lack of building materials and issues with suppliers or subcontractors
- Unexpected costs
When a risk surfaces during a project, the consequences are often painful. Loss of time, money, and performance can be devastating.
There is a bright side, however! Here are three steps you can take to mitigate these risks, resulting in exceptional project management.
Risk Identification and Assessment
To successfully mitigate risk, you need to ensure there is a transparent and frequent line of communication between project managers and stakeholders. Stakeholders might include owners, contractors and subcontractors, architects, and so on depending on your project.
Work in tandem with stakeholders and go down the rabbit hole: Ask yourselves, “what is everything that could potentially go wrong?” After going down the rabbit hole, assess the risk. For each potential risk, rate it. On a scale, discuss the impact each risk would have on the project. Then, assign priority to the largest risks.
Now that your largest risks have been identified, it’s time to create a game plan. Coming up with solutions and creating an outline prior eliminates the likelihood of error.
Lastly, ensure that you are regularly monitoring your project and continuing to assess risk. By staying on the lookout for potential risks, you will be ready with protocols in place if said risk occurs.
Happy to Help!
Shock loss can be tough—but at Competitive Edge, we’ve seen it all. We are experienced and have relationships with carriers who can understand factors outside a traditional risk assessment. We are always seeking out new insurance companies to write hard-to place and high-risk business insurance. Don’t let cancellation dissuade you from finding comprehensive coverage. Contact us today to see how we can help.