Ensuring a safety net for real estate organizations... Risk exists in every corner of the real estate business, from construction costs to unpredictable catastrophic events, there are abundant factors that could adversely affect the economics of a real estate. Insurance and risk management comes hand in hand to mitigate these potential risks as much as feasibly possible with the determination of risk versus reward. Positions in this field will need to asses the risk environment of projects and seek the balance between the associated value and risk to form a judgement and decision based on the analysis. High risk transactions will come with the choices to avoid, implement control measures and risk transfer, where insurance is used to shift the risk to the insurer. This creates an underlying layer of safety within key aspects of real estate projects to ensure protection to parties involved in the real estate transaction.
The Future of Risk Management in Real Estate
Post financial crisis, real estate veterans have taken a bigger appreciation to insurance and risk management. Insurance professionals have formulated more creative insurance products to adapt to the new financial environment. The need for insurance and risk management will always be required with its importance ever increasing. At a high point in the real estate cycle, risks and real estate costs are high and creates a level of increased cautiousness in investors and developers. This elevates their attention more towards risk management to establish a sufficient layer of safety in their assets and businesses. Insurance professionals will need to keep a keen eye on the future to change and reinvent their products to adapt and compete with other products on the market.