Risk professionals must match the evolving complexity of the construction marketplace and the expanded uncertainties in areas such as P3s, supply chain and cyber theft.
Those themes emerged in several different ways during a keynote address by Dominic Casserley, chief executive of broker Willis Group Holdings, at the International Risk Management Institute's "Construction Risk" conference in Nashville on Nov. 11.
The new risks include P3 operations, supply-chain concentrations, and cyber sabotage and theft. Significantly for brokers and agents, the risks also include how to deal with new insurers entering the market to make certain, among other things, that they will be capable of paying possible claims.
Casserley envisioned risk professionals who must be "collaborative, connected and specialized" to tie together the different data and risks at play.
Citing examples of a U.S. bridge and an Algerian powerplant for which the P3 concessionaires have assumed, respectively, 35 years and 20 years of operational risk, Casserley said risk professionals today must work in this comparatively unfamiliar territory.
As consultant to parties on both projects, Willis Group has had to be "deeply analytical and clearly appreciative of the geographic differences, be they Indiana or Algeria," Casserley observed.
Among the most important supply-chain risks that exist in construction is the concentration of steel production capacity in China, Casserley noted. "We have become enormously dependent on China's steel industry. So, the construction industry has become enormously exposed" to this risk, he said.
Drone and Cyber Risk
Cyber-risk coverage remains an elusive quest. Asked how a contractor can protect itself from drone-use and cyber risk, Casserley was equivocal.
"This is where outside help is warranted," he said of cyber theft or sabotage, adding that the Willis Group "can provide that help" in assessing and measuring the exposure.
Yet, seconds later, he added, "We don't know where this is heading or what is the risk," and that, so far, underwriters and the insurance industry have been "unable to come up with a satisfactory cover for this," partly because they can't assess the damage.
"So, relying purely on insurance to cover [the risk] is not going to make sense," Casserley said.
