Wing Kwong Choy
Construction Leader, Singapore
Construction is an essential industry for the global economy and activity in the sector is constant. There will always be a need for the renewal of existing and the creation of new infrastructure. But as the build cycle is often driven by socio-economic factors, it can be quite volatile. Construction companies need to have an acute awareness of current and emerging risk issues and be able to respond quickly to changing circumstances.
Digitalization, environmental, social, and governance (ESG) factors including climate risks, rising construction costs, and supply chain chokepoints are some of the current challenges shaping construction companies’ risk profiles. Understanding their impact allows for the design of a considered risk management framework that balances an organization’s retention, management, and transfer needs.
Marsh's globally integrated team of more 1,200 construction industry specialists helps clients deliver construction projects in all regions of the world. For more than 30 years, we have supported businesses by accurately assessing their risks, minimizing uncertainty, and embracing safety as a business enabler.
We will work alongside you to craft construction risk and insurance strategies unique to the pressures you face. We can help you design and implement programs that align to your strategic objectives, optimize your capital, and protect your business now and into the future.
Construction industry risks generally fall into the following categories:
The identification, allocation, and management of risk should start from initial project conception with an analysis of the competing factors that determine the commercial viability of the project. Typically, risk allocation takes place between the project stakeholders based on who is best placed to bear and manage a particular risk. Potential size, financial impact, and frequency of losses will play a part in prioritization. Those risks that cannot be managed will be factored into the final terms of any contract.
Demonstrating robust project risk identification and management requires a high degree of analysis and planning with all project stakeholders aware and engaged in the process. Clearly documented procedures, safety protocols, and risk registers are typically used to capture and detail how the risk will be managed.
Working with Marsh's risk management specialists can help you find the right insurance and risk mitigation protective methods for your project risk.
Although you may already have comprehensive policies for your various property and liability concerns, typically these do not apply in the case of pending construction projects, no matter the design and/or construction stage. Whatever your financial interest is in a construction project, whether as an individual investor or on behalf of your organization, you will need at least some level of construction insurance (also known as builder's risk insurance) coverage.
Insurance protection is required for injury and physical damage risks and will ordinarily be a requirement of the underlying construction contract.
Beyond these risks, financial stakeholders may require financial loss protection in the event that indemnifiable loss events give rise to extensive project delays. This coverage is designed to protect against the loss of anticipated revenues from projects that are delayed from moving into an operational phase, or the costs of servicing debt taken out against the construction, which would otherwise be serviced by operating revenues.
A range of other insurance coverages may also provide protection from risks associated with transit, pollution, design, and a host of other identified project activities.
Construction Leader, Singapore