High-caliber, competitive contractors make strategic investments that help distinguish them as reliable and valuable partners. Among those investments is technology. Of course, contractors who have made this investment are already aware of the benefit of using software to keep projects on time and on budget. But many are just beginning to understand how their own data can create a flywheel that breeds a stronger safety culture and an improved risk profile in the eyes of insurers.
And because insurance is one of the top costs on a project, the most budget-minded contractors are using data strategies to reduce insurance costs and obtain broader coverage.
As nebulous as it may sound, beginning your journey of using data to strengthen safety programs and improve insurance outcomes is easier than you might think. That’s because the operational data you already capture can enhance your understanding of your performance in relation to risk mitigation.
In doing so, you’ll reveal areas of success and opportunities of improvement. By translating these insights into action, you’ll power the flywheel of reducing risk. Not only can you use data to create safer, more profitable projects but it can also result in favorable insurance rates and broader coverage. Here are tips for getting started:
Almost everything you collect is an indicator of risk.
When you look for data points to help you assess and manage risk, start with anything you capture in your software that includes workflows or completion dates. Many successful risk managers look at observations, submittals, change orders, inspections, daily logs and more. Let’s look at requests for information (RFIs), for example. As you analyze your RFI data, consider when they are happening and how quickly they are being responded to. If they are taking a long time, that means that there is a higher likelihood of rework and schedule delays, which increases the chance for incidents to occur. In fact, some people refer to RFIs as “Risk Frequency Indicators”. These data points allow you to see where your firm might be missing the mark and where your staff can make improvements.
The role of the risk manager is evolving.
Historically, a risk manager’s responsibilities included purchasing insurance and managing claims. However, the modern risk manager role has moved away from “handling insurance” to becoming a trusted advisor to the C-suite. Risk managers have a deep understanding of revenue and exposure, and can advise on operations and strategy to bring value to the table. Access to technology and data is further accelerating this. Risk managers now have a historical view of where risk tends to creep in, and can use it to make better decisions and put practices in place so that risk management becomes proactive instead of reactive.
Managing risk is a shared responsibility.
Firms without a risk manager should tap into internal teams as well as external ones. By distributing risk awareness throughout the organization, everyone in your firm can become a safety champion. To get started, lean on the external expertise of vendors, consultants and partners who can help you train teams to identify and manage risk. Then, as your business grows, you can add a risk manager.
Have an open dialogue with your broker and your underwriter.
The insurance landscape is evolving, with some adopting an entrepreneurial approach beyond using conventional underwriting models. To take advantage of this shift, you should foster transparent conversations with your broker and underwriter to establish trust. Rather than proving you own a safety manual or mere box-checking, you should shine a light on how your safety practices have a tangible impact on the jobsite. You can contribute to the underwriting process and weave a favorable narrative by demonstrating that you have a history of efficient and effective operations, enabled by tech adoption.
The future of risk management is already taking shape.
The emergence of artificial intelligence, insure-tech, risk-tech and construction-tech is collectively enhancing safety in the construction industry. For example, monitoring devices can track equipment and workers. Water detection devices alert when an intrusion or leak occurs. These tools allow you to immediately respond and intervene. Digital documentation and record-keeping can help you ensure compliance. AI can help identify patterns and trends so that you can proactively shift your operations, prioritize preventative measures and mitigate risks before they occur. Integrating these technologies significantly reduces the chance of human error, enhances safety protocols and reduces incidents.