Life After Disaster: How Agents Can Help Contractors Plan Ahead to Handle a Crisis

With floods and tornadoes creating havoc throughout the Midwest this spring, and Japan’s earthquake and tsunami still fresh in our memories, no one has to be convinced that natural disasters have the power to destroy lives, let alone businesses. What may be less obvious, however, is that an unprepared contractor is always just a crisis away from a business disruption that could have grave consequences.

Whether it is a job site accident that results in worker fatalities, a construction mishap that contaminates the environment, or inadequate danger warnings that lead to an injury, almost every aspect of the construction industry offers opportunities for things to go wrong. Once a crisis begins, the steps a contractor takes – or fails to take – can have a huge impact on the costs, reputation and future viability of the business.

Brokers and agents know that the businesses that survive the unexpected are the ones that take precautions by planning in advance on how to handle a crisis. By helping clients understand the advantages of creating a crisis management plan, and then providing them with tools to do so, agents can prove their value as a knowledgeable ally for contractor customers.

When a Plan is Needed

Tsunamis and tornadoes are dramatic, but the crises that can bring a project to a halt and put a contractor’s company into the harsh glare of public scrutiny are more likely to be comparatively small-scale accidents. For example:

• A work site is not secured, and heavy equipment is left there for the weekend. A few kids from the neighborhood wander in and climb aboard the equipment. When one accidentally falls and badly hurts himself, there is harsh scrutiny from the media.
• Or scaffolding supporting several workers collapses, seriously injuring one and calling into question the contractor’s safety practices.
• Or a company employee directing traffic around a job site inadvertently waves a school bus driver through when heavy equipment is backing up, causing a collision.

Unfortunately, the potential for making a bad situation worse is present if a crisis management plan is not in place. A plan that is created well before a crisis allows a company to think through how to approach an issue and what actions to take. The planning can be done without the pressure that exists for immediate action when a crisis is underway.

Assembling a cross-functional team that includes representation from all different aspects of the operation enables the development of a plan that has depth and a well-rounded perspective. No matter the size of the company, contractors are encouraged to turn to their insurance agent or broker for assistance and to access crisis planning resources that should be available from their carrier.

The Seven Elements of a Plan

A crisis management plan is best when it is tailored to a company’s size and situation. Although a crisis can take many different forms, there are common aspects that often come into play, no matter what the situation is. An effective plan addresses those common aspects with the following seven elements.

Keep the Plan Current

The best plan is of little value if it sits on a shelf and becomes outdated. Agents and brokers can help their contractor clients stay prepared by reviewing the plan at least annually, preferably in conjunction with the carrier’s risk control specialist who is dedicated to the construction industry. In addition, they should make sure that the contractor has insurance in place to cover all or a portion of the expenses incurred when it is necessary to hire a public relations firm to mitigate the negative publicity associated with a crisis situation.

By their nature, crises are unexpected occurrences but that doesn’t mean businesses should face them unprepared. By helping customers create a crisis management plan in advance, agents and brokers can perform a valuable service and strengthen their relationship with contractors.