What Does Risk Management Mean for Your Contracting Business?
No one wants to run a risky business. Yet, you address risk virtually every day in your business dealings. If you want to meet risks head-on and find ways to manage them, there’s no way out but through. Risk management entails more than just physical safety, but money, operations and even scheduling. Looking at your business dealings through the lens of risk management can help you identify problems you didn’t notice, before they become an issue.
What Is Risk Management?
When you run a construction business, risk is sort-of built into your business plan. There’s a lot of labor with heavy equipment, sometimes hundreds of feet above the ground. You often don’t have to build your own risk profile in these instances because OSHA has already done the work for you. Risk management involves accepting that most decisions you make in your business carry a level of risk. The management aspect requires you to think about how it can affect you, your business, your projects and your employees. This allows you to form a plan to minimize it as much as possible.
Use Past Projects to Evaluate Risk
With this broader definition of risky behaviors, it’s often useful to start by looking at your past projects. If you tried a new technology or building practice, that’s a risk. Learning that it improved your efficiency or gave you a better result means that future applications of the idea will carry less risk. However, if it caused problems during work, forced you to go far over budget or made the project take longer, the risk you take by continuing might be higher. People who don’t have a lot of experience with personal projects might look at municipal works projects or high-profile private businesses to get ideas.
Get on the Same Page Before You Start
Risk management requires a careful analysis of what you know and what you cannot guarantee. When everyone on the team has different opinions about what to do and how to do it, the risk of any aspect of the project goes up. Risk doesn’t necessarily mean that anything will go wrong, only that there’s a chance that you might not get the result you expect. Getting everyone on board to talk about risks and expectations can help you think about it in ways you might not have, and confirm that everybody is looking for the same issues.
Focus on the Riskiest Prospects
During any project that takes longer than a day, you’ll probably have multiple opportunities to evaluate risk. If you face a construction delay, you face a different set of risks in pushing through as you do by running behind schedule. In most projects, the biggest risks center around health and safety, the completion of the project and the security of your business. Make sure that you are attending to these first, and then work your way down to the smaller concerns.
Get a Second Opinion
The reason you want to collaborate in risk management is that people tend to look at the same problem in different ways. If you have the ability to bring in a second or third person to work on risk management with you, you’ll likely end up with a more comprehensive understanding of the risks on each project. Even when you are a company of one, there’s good reason to keep evaluating your efforts. If you’re working hard to manage risks in a particular way and it isn’t working, you should consider changing your approach.
Taking risks as an individual can feel exhilarating. As a business, it’s an entirely different story. Risk management helps you minimize possible problems and keep your company functioning for another day. To get started, contact CSLS today!
