Health and Safety
Aside from the physical and emotional trauma of a serious incident, the financial impact of a site being shut down while an accident is investigated and the potential time and money involved in any resulting WorkSafe prosecution weigh heavily on businesses and their owners.

From a risk management perspective, the health and safety obligations on builders and the support systems available are extensive. As the greatest risk identified by builders, this should, and in most cases rightly does, attract the most focus from construction businesses.

Bad debts
Second on the list was customers not paying or cancelling. Participants felt that while this was relatively rare, it could have a significant adverse impact on their financial position if and when it occurred.

Builders also have a good amount of legislative support to mitigate bad debt risk through the Construction Contracts Act and the payment claim/payment schedule system. There is also a wide availability of professionally drafted standard form contracts, escrow services and other mechanisms to ensure prompt payment and minimise disputes. However, unlike health and safety, these are often not well used by builders, leaving them exposed to a significant area of risk without good risk mitigation practices in place. Insurance is typically unavailable to cover this risk, except for larger businesses where trade credit insurance becomes an option.

Natural disasters
Third was the impact of heavy weather and natural disasters. While the destruction caused by Cyclone Gabrielle and the flooding in large parts of Auckland in early 2023 is still relatively recent, participants in Christchurch ranked natural disasters as the greater risk. Accidental property damage by staff (Auckland), the availability and reliability of staff (Hamilton) and theft of tools (both Palmerston North & Auckland) were seen as greater risks.
Damage and losses caused by weather and natural disasters are areas where insurance can traditionally help to reduce the financial impact on a business. The same applies to accidental damage caused by workers and theft of tools.

Human resources
Staffing is another area that is heavily legislated but not necessarily in the employer’s favour. It’s also not an area where insurance can typically help reduce the financial cost of issues caused by workers (except in the case of employment disputes or liability for illness/injury).

At a total level, the top five risks represented over half of all responses. This tells us unsurprisingly that builders nationwide have very similar risks. However, there is some local variation.

Risk mitigation
The responses, compiled via a series of focus groups, also asked participants to identify solutions to mitigate the risks they identified. None of these solutions will surprise anyone. Unfortunately, it’s the putting into practice of effective risk mitigation strategies where builders typically fall down. From our experience this usually comes down to the time involved, the fact that the work required is often outside a builder’s skill set and comfort zone, or they have a poor appreciation of the cost-benefit return from investing in risk mitigation measures.