A priority for every construction firm, regardless of size, is the effective management of risk.

The industry is rife with dangers, more than any other. Too often, risks - of various types - are underestimated or overlooked, making it critical to closely follow and manage policies and practices to guard against them.

What has complicated construction’s risk-management challenge has been the environment for liability claims - which have grown in frequency and complexity.

Part of the problem is a booming market as costs rise and workers are hard to find, pressuring project timelines and budgets and resulting in more claims. Construction work itself leads to higher claims than in other industries, with total lost time severity for claims 50% higher than average. Natural disasters are worsening, and engineering claims also have a role. And construction-related workers compensation mega claims (over $2 million) are prevalent, in 2024 accounting for over 2% of total loss dollars - over $1 billion.

Reprinted courtesy of David Chmiel, Construction Executive, a publication of Associated Builders and Contractors. All rights reserved.