2017 Real Estate Industry Risks

As compared with businesses overall, real estate companies reported greater concerns over severe weather damaging property and less concern over cyber risks. They also reported greater concern over the use of personal autos for business as compared with all businesses.

Protecting the value of their portfolio is a priority for real estate companies, as their list of top business concerns reflects. Legal liability, including the risk of lawsuits, leads the list for 52% of real estate companies. Contractual risk transfer when contracting for additional building services can help mitigate this risk.

Day-to-day risks, including customer slips, trips and falls, are a concern for real estate companies. Catastrophic risks, including those related to severe weather, fire and water damage, can also lead to large losses for real estate companies, including loss of rental property income and the costs of moving tenants back into a building after repairs are completed. Among catastrophic risks, damage to business property, equipment, facilities and vehicles concerned 43% of real estate companies.

Cyber risk is a top concern for 48% of real estate companies. Specific concerns related to cyber risks include an intruder gaining access to the company’s banking accounts or financial control system (45%) and a security breach (43%).

In addition, real estate companies list the changing workforce (32%) and energy dynamics (18%) as top emerging risks for their industry.

Forty-one percent of real estate companies describe risk prevention as an important management activity, yet only 29% feel confident that they are properly insured. While cyber risks are a leading concern, only one in 10 real estate companies report having a separate cyber insurance policy.