Three Key Tips to Optimizing a Contractor’s Risk Management Function

Every single day we encounter uncertainty that stems from risk. We constantly come across countless activities that have the potential for undesirable consequences. There are varying level of risks. One area where risk is consistently high is in the construction industry – mainly on project sites. Several factors can jeopardize a multi-million-dollar construction project, so the risk on a project must be well-managed. Not only can risk management help avoid unwanted outcomes, but it also has the potential to streamline operations, improve safety, and boost project confidence as well as profit.

              Risk Managers are a key component of the construction industry as they assess, control, and monitor the possible hazards of a project. In a recent interview with Peter Kapler, Senior Vice-President and National Director of Performance Security at AON, he states that “Risk Managers can play a vital role as an information and knowledge hub.” By doing so, they can beneficially serve the overall enterprise at a construction company. During our sit-down with Peter, he shared three tips on how contractors can optimize their risk management function:

1.      Breaking Down Silos

2.      Leveraging Data

3.      Empowering Your Risk Management Team

Breaking Down Silos

              A Contractor’s Risk Management team sits in a unique position as they have the ability to make connections between Operations, C-Suite, and external insurance carriers. Risk Managers serve as a knowledge hub because they have access to several sources of information – their internal risk data, and guidance from industry sources such as RIMs and IRMI, and benchmarked data and Risk Engineering insights from their Carriers.  By utilizing Carrier input, Risk Managers can provide insights into managing risk better; however, this is only possible if the silos within an organization are broken down and better connectivity established between Risk Management, Operations, and the C Suite.

Leveraging Data

              Another way Contractors can help optimize their Risk Management function is by leveraging data. What does this mean? To harness data into something meaningful. According to Peter Kapler, there are several pools of data available within a construction company’s ecosystem; if this data is not appropriately pooled and linked together, there is a missed opportunity for the discovery of the true cost of risk. Data can help Risk Managers make intelligent decisions on how to price risk - it is important that the data is evaluated and used efficiently and effectively. Integrating this data across Operations, Finance, and Risk Management can improve the overall enterprise of the construction project; however, this cannot be effective if the data is appropriately linked together.

Empowering Your Risk Management Team

              The third tip Peter shared with us on optimizing a contractor’s risk management function is to empower the risk management team. If Risk Managers develop internal relationships and build alliances within Operations, they will have an easier time delivering important risk information. When a solid relationship with the operational team exists, Risk Managers can also influence the C-Suite by providing comprehensive data that significantly affects the contractor’s profitability and well-being.

In conclusion, is important that silos within an organization are broken down, so a vested Risk Management team can effectively communicate important data and information to operations, C-Suite, and external Insurers. By breaking down silos, leveraging data, and empowering the risk management team, a construction company will see an improvement in their enterprise. An entire organization can benefit from the wealth of knowledge risk managers possess about both the marketplace and its organization. If you would like to learn more about what Peter Kapler has to say, listen to our podcast, 3 Key Tips to Optimizing a Contractor’s Risk Management Function.

Links:

Connect with Peter on LinkedIn
Follow AON on LinkedIn
Visit AON on the web here 
Email Peter at peter.kapler@aon.ca 
Connect with Peter Duggan
Connect with Mike Diercksen