Q&A with industry expert reveals what could affect your company in the coming months
by Elizabeth Manning
November 23, 2016

Part of an effective risk management program involves monitoring the industry and economic trends that could affect your business. Cal Beyer is the director of risk management at Lakeside Industries in Issaquah, Washington. Beyer has over 27 years of professional experience in safety, insurance and risk management serving the construction industry. He serves on the executive committee and workplace task force of the National Action Alliance for Suicide Prevention and is a member of Construction Business Owner’s editorial advisory board. Below are his responses to common questions facing today’s construction risk manager.

CBO: What changes to the industry have had the biggest impact on risk management in the past year?

Beyer: A major change that I have experienced is the ever-expanding role of risk managers and the discipline of risk management. As construction operations become more complex and as construction insurance becomes increasingly specialized, the value of risk management professionals expands. For example, risk transfer continues to be a major exposure for all parties involved in construction contracts. It is important to understand the specifics of construction contracts and to ensure that your firm understands key clauses affecting indemnification and named additional insured.

Another industry trend affecting risk managers is the compressed construction schedules from accelerated and turnkey project delivery systems. This requires increased coordination and improved use of technology for document review, approval and retention, as well as ongoing project collaboration.

CBO: What current trends will impact the future of risk management for business owners?

Beyer: This year saw an increase in regulatory risk. Whether your firm is a GC/CM, heavy/highway or specialty trade contractor, it was, or will likely be, impacted by new regulations affecting post-incident drug testing, confined space entry, silica, hours of service and overtime hours, among others. Next year will see increased time focused on developing and implementing new policies and procedures and training supervisors and employees on the programs and protocols. In addition, the current shortage of skilled workers is creating a ripple effect for risk managers and safety directors. The shortage impacts productivity and challenges quality as these new workers gain proficiency and skill.

CBO: Currently, what is one of the biggest construction risk management issues & how can business owners mitigate the problem?

Beyer: I continue to believe that business continuity and cybersecurity are not given the attention they deserve. Construction companies would be wise to assess the levels of risk inherent in their IT systems and increase oversight and investment in security of enterprise business data. Cybersecurity is a real risk, and it is imperative that construction owners expand the level of internal controls to combat the increase threat of malware, viruses and hackers. There are great resources available from insurance advisors and carriers that will help your company complete a vulnerability assessment. Insurance coverage is readily available, and many insurance products include pre- and post-disaster services to help in the event of an IT disruption.

Other major issues affecting construction companies are human capital risks involving the safety and wellbeing of their employees. There is a rising need to expand wellness programs in order to help employees embrace self-care in the promotion of healthy lifestyles to improve the quality of life during their working and retirement years. Some of this is necessitated by rising health care benefit costs and changing benefit plan structures. However, some of this change is a reflection of the industry’s evolving commitment to employee safety. At our company, we are increasingly focused on educating our employees on the importance of safety at work, home and play.

Finally, business owners are cautioned to consider mental health and suicide prevention as the next frontier in safety. A report by the Centers for Disease Control and Prevention (CDC) in July 2016 revealed that the construction industry is the No. 1 industry for suicides by occupation and the No. 2 industry for suicide by rate, with 53.3 deaths per 100.000 workers. To make matters worse, architecture and engineering is the No. 5 occupation for suicide rate. A related factor is the opioid epidemic in our country. The construction industry has the highest incidence of prescription opioid use in the treatment of occupation injuries. Human resource, risk management and safety professionals must be aware of the risks when injured workers are being treated with prescription opioid pain medications.