Construction Companies Face Growing Number of Risk Management Challenges

The growing number of intense and severe weather events and the struggle to adequately staff larger projects are growing concerns for the construction sector.

Natural disaster exposures pose a significant risk for companies working on projects in areas prone to catastrophic weather events, with threats to structures being built, materials and construction equipment, said Cleveland-based William Powell III, risk and safety manager at Donley Cos. Inc.

Construction risk managers are also concerned about how insurers will respond to damage claims, he said. Powell also said he is particularly concerned about windstorms in the Midwest and the increasing frequency of hurricanes.

To address the risk posed by severe weather, risk managers should understand what is covered by insurance and have a solid crisis response plan that keeps workers safe and the job site and equipment secured, Mr. Powell said. “You can’t wait until a storm is two hours away and try to put your plan into play. You have to be studying the weather forecast,” he said.

While Donley saw a favorable renewal this year thanks to accurate estimates of property values, Mr. Powell said he foresees a hardening of the market for the property side of the business due to catastrophic weather events.

The company has seen a rise in the number of projects in the mid-Atlantic region—specifically in Raleigh, North Carolina, and Charleston, South Carolina—and this increase has highlighted another emerging risk in the construction sector: the shortage of skilled workers.

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