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avoid extended litigation by transferring some of this risk through aggressively training your employees and enforcing safety standards. SECURE PROPER INSURANCE. Ultimately, after everything you do, there will still be an occasion when all your good eforts are not enough. Now the ambulance at the bottom of the clif is needed and ready. Make sure you carry the necessary insuranc- es with limits that protect your equity and investment. Policies can be complicated and it is important you understand what you are buying and what it really covers. Read your policies. You might be surprised that the poli- cy does not cover what your agent said it does. THE POWER OF THREE. Combining the power of Prevention, Avoidance and Transference will be worth the efort. A single area of focus may take less efort, but it will not protect your investment in your company. You work too hard to not protect this investment of time and money. Taking a "PAT" approach, even in its simplest form, will provide you the risk management sufcient to protect you, your company and your equity. Te challenge is always implemen- tation. Take it in small steps; lay out a simple plan that will get you from where you are today to your desired level of Risk Management. You can do it. It is worth the efort! | you did not develop, the structural integrity of a home you are remodeling, or a customer that visits the jobsite every day exposing themselves to undo risk? A good solid contract will transfer these and other risk back to the customer. Years ago my company faced legal action over the death of a customer on the jobsite. We prevailed in district court, and when the family appealed to the 10th circuit we prevailed again. Te only reason we won this fght was a section of our contract that said "don't visit the jobsite" and if you do you are responsible for any injury "up to and including death." Look at each project individually, identify the risk of the project you are not in control of and transfer that back to your customer. TRANSFER RISK TO YOUR TRADE CONTRACTORS. Contracts with trade contractors are a great way to transfer the risk of the trade's actions or work back to them. Make trades responsi- ble for following the plans, your jobsite rules, OSHA safety, quality, security and anything else you can think of. Make sure that they are insured for auto, general liability and workers' compensation. Ensure you are named as an "additional insured" on their GL Policy; that coverage includes "completed operations" and that they have limits that are sufcient for the their work and the risks of the project. TRANSFER RISK TO EMPLOYEES. As employers we are responsible for our em- ployees. Part of that responsibility is docu- mented training for safety, culture and skills. Having a good employee manual, company safety manual, documented safety training, enforcement of safety and employee policies and good harassment policies can and will transfer some of the risk to the employee. If an employee is injured, you can fulfll your responsibility of healing through workers' com- pensation and human compassion, but you can n previous segments of this se- ries we introduced the concept of "PAT" or Prevention, Avoidance and Transference of Risk. In this fnal segment we discuss Transference. For many companies, transference is the only risk management tool utilized. In addition to this singular focus, most companies believe transference is limited to the purchase of in- surance, thereby transferring risk to an insur- ance carrier. Transference is the ambulance at the bottom of the clif while Prevention and Avoidance are the fence at the top. Too often, home builders have the ambulance's engine and lights running as their only risk management tool. Tere are many ways to use the concept of transference that don't require purchasing insurance. You need that ambu- lance but, in this case, it should not be your frst responder. TRANSFER RISK TO YOUR CUSTOMERS. What? How can I transfer risk to a customer? Contractors are really service providers: We build things. Contractual transfer of risk to customers is necessary in every project. Tink about it! Can you take responsi - bility for a lot Proactive Risk Management: Transference By J. Bradley Simons J. BRADLEY SIMONS has an M.B.A. from Westminster College and more than 30 years' experience in managing construction companies. Currently Brad is CFO of Magleby Construction and a frequent education- al speaker at the International Builders Show and Custom Builder's Symposium. I 18 December 2014 QR ForResidentialPros.com PROFITS: On Your Business