NU Online News Service, Nov. 15, 1:39 p.m. EST
With 67 percent growth expected in the construction industry by 2020, enterprise-wide measures need to be taken to begin to identify and manage major risks, according to a report by Aon.
Mary Ann Krautheim, client strategy officer of Aon Construction Services Group, says in a statement that given the expected growth in this area, “Business leaders who use an enterprise-wide approach to identifying and assessing risks today will emerge from the economic storm in a stronger position with a larger market share.”
While survey respondents of the 2011 Construction Industry Report cite senior management’s intuition and experience as the primary method of identifying major risks, the report underlines the importance for organizations to embrace an enterprise-wide global risk management approach.
The report reflects the input of 60 global construction industry respondents to Aon’s 2011 Global Risk Management Survey.
The construction industry’s top risks, according to respondents, are:
- Economic slowdown
- Increasing competition
- Damage to reputation and brand
- Failure to attract or retain top talent. Regulatory/legislative changes and third-party liability tied for the fifth spot, Aon says.
When asked how they purchase/control their insurance programs; 52 percent of respondents with operations in more than one country indicate their corporate headquarters controls procurement of all of their global and local insurance programs while 41 percent say their corporate headquarters purchase some lines and leave local offices to handle other lines.
Among the global policies that organizations purchase, the most common types indicated in the survey are related to general liability, including public/product liability, directors and officers liability (D&O), and property damage/business interruption.
The survey also reports that 33 percent of construction companies surveyed use of a captive or Protected Cell Company (PCC); with 18 percent saying they will initiate a plan to create a new or additional captive or PCC in the next three years.
The most common coverages currently underwritten in the captives are general/third-party liability, auto liability, employers’ liability/workers’ compensation and property, the survey finds.