RISK MANAGEMENT


Beating the Odds


How to Identify and Oppose the Biggest Risks Facing Construction


BY MARK WOODITCH, HUB INTERNATIONAL


Te risks are everywhere.


From an uncertain economy to a rising number of weather-related disasters to an explosion of cyber attacks, the California construction industry is facing a wide variety of challenges. Only construction firms that face those risks head-on will still come out ahead – and only if they prepare adequately.


Identifying the Risks • Disappearing Talent. Roughly 20% of construction workers are age 55, rapidly approaching retirement age. And with the ongoing labor shortage, firms are finding it harder than ever before to fill open positions. Despite growing popularity of apprenticeship programs and an infusion of cutting- edge technology, younger workers just aren’t choosing construction as a career path. Business leaders will need to think creatively to attract new workers to their organizations.


• Uncertain Economy. With the population growing and a related jump


14


CALIFORNIA CONSTRUCTOR NOVEMBER/DECEMBER 2025


in home sales, there are many reasons to be optimistic about profitability of the construction industry in California. A persistent housing shortage has made residential building an attractive option, so many firms will be driven to new projects. Yet fluctuating materials costs, uncertain mortgage rates and maturing commercial real estate debt may lead to more defaults, which could be a real challenge to the industry’s bottom line, shrinking profits considerably.


• Climate Change. California is particularly vulnerable to weather- related disasters, facing wildfires, flooding and even mudslides in early 2025 alone. During the summer months, workers in Southern California will face extreme heat, which is also the leading cause of death for workers laboring outside. And while schedules can be adjusted at times to protect workers from harm, this strategy also leads to construction delays and increased costs for firms.


Organizations will need to find solutions for managing the risks.


• Cyber Attacks. In 2024, it was California that suffered the most from cyber crime, leading the country in number of complaints and the largest financial losses. In the construction industry, the situation is particularly challenging because of an increase in technology use coupled with firms that are shockingly unprepared for cyber attacks. Many firms haven’t prioritized cybersecurity, despite the fact that these organizations store huge amounts of private and sensitive data, from project designs and intellectual property to company bank accounts.


Best Practices for Managing Risk Awareness around the risks is just the first step. To achieve success, firms will have to learn to mitigate the risk effectively. Consider these best practices: • Adopt personalized benefits. Standard, one-size-fits-all benefits are no longer enough. To attract and retain staff, it’s critical to offer appropriate benefits coverage


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