Hello World! Welcome Friends! Contractor General Liability Insurance is a classic example of transferring risk to another party. It is one of the strategies you can use in managing risks on your project. Now is an excellent time to revisit the discipline of risk management. Covid-19 has shown how threats can derail construction projects.
What is Risk Management?
Risk Management is the process of identifying and managing potential threats to your project. Once you have identified these, the severity of the threat can be analyzed. You can then formulate an appropriate response for each threat. From there, these risks can be monitored and controlled. For example, should you invest in Contractor General Liability Insurance and transfer potential financial risk to another party. Is it really a better strategy to only take action if something goes wrong? Covid-19 has taught us to take risk management seriously.
Identifying Risks
The project team should identify the threats to their unique project at the outset. Typical risks in construction include:
- safety hazards on site that can result in accidents,
- unexpected discoveries when construction begins,
- shortages of labor,
- material supply problems,
- natural disasters,
- theft
Quantifying Risks
The next step is to quantify the severity of the risk. How is this done? Assess both the probability of it happening and the impact it will have if it does materialize. This will establish if the risk is of low, medium, or high severity. The team can then give appropriate attention to each individual risk.
Responding to Risk
Choose the response that is best for each threat. Some options are:
- Take action to bypass the risk. For example, if there is a possibility a supplier will not be able to provide a particular material, you could change supplier or change the material to be used.
- Take action to reduce the probability or the impact of the risk. This could mean building a prototype of a design early in the project to learn if it will work. Another could be to visit a vendor frequently to ensure they are on track.
- Take action so that another party is responsible for the risk. Buying Contractor General Liability Insurance is an example. You identify there is a risk that an accident could occur. It could result in a lawsuit for negligence. The costs of damages could put you out of business. You transfer this risk to your insurer.
- Accept the risk and only formulate a response if it materializes. Examples may be for threats of terrorism, war, or significant changes in the law.
- Monitor and Control is the ongoing process of monitoring the risk and implementing the appropriate action when needed.
The Value of Risk Management
Contractor General Liability Insurance is a good example of how valuable risk management is. Accidents are common in construction. You can minimize this risk by implementing good safety practices, but you cannot eliminate the risk. This insurance is essential if you face a lawsuit for causing bodily injury or damage to another’s property. It will assist with the cost of your legal defense as well as the court settlement.
Contractor General Liability Insurance is Quick to Arrange
Speak with us about Contractor General Liability Insurance. Our agents are experts and will get you the coverage you need at a price you can afford. Call Contractors Liability on 773-916-5744.
Click the links below for any posts you have missed:
Contractors Liability Insurance
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Essential KPIs to Watch Out For
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