Risk Management: A Look Behind the Scenes
What is a Risk Department, and why does Faith Technologies have one?
Faith Technologies’ Risk Department, as the name implies, operates to identify and mitigate against the various forms of “risks” that confront the company. A “risk” is anything that can adversely impact a project (and ultimately the company), and includes payment terms, notice requirements, project schedule changes and insurance requirements. These risks often vary from project to project, but usually stem from the contract language, what type of project is being completed, and Faith Technologies’ relationship with the general contractor.
The Risk Department begins its work to identify risk as soon as a subcontract is received from the general contractor. This includes reviewing the language of subcontracts that are received, confirming receipt of all of the contract documents and identifying applicable state and federal statutes and how they impact the contract language. Past performance and experience form the largest basis for identifying whether risks are likely to actually occur, as distinct from formulating worst case scenarios to identify risks. Risk must also take into consideration what is the likelihood of any occurrence and what the possible consequences of an occurrence are. This analysis pits the “what could happen” against the “what is the impact (financially) to the job.” These concerns are then balanced to ultimately determine if the risk is of such a priority to seek changes to the contract.
Each project manager is responsible for their project and by extension what the contract language is. Risk works directly with the project managers to identify these risks, prioritize them, and ultimately determine what changes to the contract language will be requested. The goal is to have the risk analysis completed before our employees are on site. That way, the risks have not materialized, and it allows Faith Technologies to be proactive in order to avoid the risks or reactive timely and appropriately when something occurs.
While we do not work on project sites as the electricians do, the Risk Department works very hard at identifying those issues which could impact the company having a financially successful project, and to minimize or avoid those risks that will impact a project. The ultimate end goal is to place Faith Technologies in the best possible position, contractually speaking, that we can.