Willis Towers Watson director for the Construction Industry and Broking Division Janice SangMegatrends such as geopolitical instability, talent optimization and digitalization increase risks for the construction, infrastructure, power and energy industries which normally undertake long gestation projects. Megatrends are global and sustained macroeconomic forces that impact business, society and culture.
A global survey by Willis Towers Watson of 350 construction industry leaders resulted in the 2017 Construction Risk Index that ranked risks by severity and ease of managing them.
Janice Sang, director for the Construction Industry and Broking Division of Willis Towers Watson, said the top risks identified were negative changes to government financing, policies and priorities; cost and time overruns; threat from new and emerging competitors; capital availability, funding and liquidity; lack of government expertise; increased security threat from cyberattacks and data privacy breaches; and intellectual property and plant breaches.
James Wong, Willis Towers Watson Strategic Risk Consulting partner for South Asia, said analytics is central to risk financing optimization and advised firms to collect data and capture them “in a structured manner that lends them to future analysis.” Data analysis leads to transparent, factual and informed decisions, although they will not be perfect.
Fabien Conderanne, Willis Towers Watson Financial Solutions deputy head for Asia Pacific, said big infrastructure may qualify for credit and political risk insurance. Credit risk insurance protects lenders in an infrastructure project from nonpayment, while political risk insurance covers financial losses suffered by an insured entity due to the action or inaction of a foreign government that interferes with investments or contracts.
Steve Jenkins, Willis Towers Watson Property and Casualty executive director for Asia, said the Asia power insurance market remains soft or in the buyers’ favor in 2018. However, deductibles and coverage are expected to remain constant, and premiums will continue to depend on the individual risk profile of each project such as natural catastrophe exposure, geography and technical aspects. Due to natural catastrophes in Asia in 2017, economic losses were estimated at $300 billion, with insurance losses at $136 billion.
Alasdair Carnduff, Crawford & Company director for Philippines and Asia Pacific, advised firms to consider delay in start-up insurance (DSU), which provides developers, project owners and contract principals with added protection during the construction phase of a new development. DSU indemnifies against loss of revenue, project finance costs or additional costs as a consequence of an insured event or events that delay the completion of a project.
Steve Richardson of the Construction and Risk Engineering Division of Willis Towers Watson said risks associated with power plant construction fall under input risks that include plant location, technology and project agreements; construction risks, which can be reduced for example by using standard plant layouts; project risks that include equipment supplier issues, health, safety and environment, and permits and licenses; and hazard risks where it is important to identify risks that cannot be insured.
Vangie Daquilanea, Willis Towers Watson senior rewards consultant for Philippines, Malaysia and Thailand, said talent and reward plan design is part of “future-proofing the HR (human resource) system” that serves an increasingly multigenerational work force.
Generation Y or millennials make up half of the employee population in almost all industries and 76% of the labor market. The biggest proportion of Generation X workers are in energy, construction and pharmaceutical and health sciences, making up 34% to 38% of these industries, although they comprise only 18% of the labor force. Baby boomers comprise 2% of the labor market, 18% of the construction sector and 14% of the energy sector. Generation Z workers make up 4% of the labor market and 3% or less of most industries, except BPOs.
They all spoke at a forum, “Deconstructing Risk,” held on April 24. Willis Towers Watson risk management capabilities include continuous risk assessment and consulting services, infrastructure solutions, project life-cycle risk services, financial solutions, environmental/political and terrorism risk coverage, organizational change and talent management consulting, risk engineering and optimization and natural catastrophe reviews. (Story/Photos by: Carla Paras-Sison)
Property and Casualty executive director for Asia Steve Jenkins
Senior rewards consultant Vangie Daquilanea