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Emerging and Evolving Risks

Identifying and understanding the world’s emerging and evolving risks and their impact to society and our customers is at the center of all that we do.

For real estate owners, maintaining building infrastructure is a top concern
Feb 19, 2021

Failure to adequately maintain the infrastructure of a property can lead to significant property and liability losses.

Once you decide to become a commercial property owner or manager, you assume responsibility for maintaining the basic infrastructure of the building and the surrounding property. This is true for apartment buildings and commercial facilities, single-tenant or multi-tenant. Failure to adequately maintain the infrastructure could lead to major property and liability losses.

Assuming the walls of your building are sound and not in danger of imminent collapse, what else is there to worry about?

Start with the roof. If the roof of your building in unable to keep out rain or support a heavy load of snow, the resulting water damage inside the building could cost you a fortune and force your tenants to move to a new location.

Consider this costly scenario: Rainwater enters an 11-story building through a broken roof drainpipe and unprotected window openings. The water runs throughout the building via elevator shafts, causing $200,000 in damage.

Heavy rain and snow aren’t the only ways to cause significant water damage in a building. In fact, most water damage claims are “inside jobs” — burst or leaky sprinkler systems or plumbing that destroys walls and floors from the top floor down. Nothing lasts forever and that adage rings true when it comes to pipes and preventing water intrusion, especially in older buildings.

Consider these costly scenarios:

  • An improperly installed soap dispenser falls onto a lever-style faucet, causing water to run over the weekend, flooding three floors below and resulting in $350,000 in damage.
  • Workers carrying a large ladder inadvertently knock off sprinkler heads that were already hooked up and a shut-off isn’t available, causing thousands of dollars of damage.

One of the most common and costliest hazards is when a building’s plumbing and other water-filled systems freeze. Ice formation can develop into significant obstructions that can leave the systems impaired. The result could be a loss of water pressure or flow and incapacitated fire protection systems. And because water expands when it freezes, cold weather can sometimes cause pipes, valves and fittings to break and create significant water damage that may not be immediately detected.

The war on water

Any commercial building needs to wage a “war on water” — creating effective strategies and tactics to keep away sources of moisture, including groundwater, water table, floodwater, seepage, storm water, utilities, sewers, snow/ice melt and runoff or discharge from adjacent properties.

To minimize damage, it is important for organizations to develop a moisture-control plan considering site logistics and storm water control. Plans should focus on addressing a building’s exterior envelope detail, particularly during the construction phase and throughout the working life of the building. Having a plan in place for proactive moisture control helps reduce the risks of water intrusion into the building and aids in controlling moisture inside the building and in surrounding areas.

Beyond the damage to the physical property, the safety and lives of occupants and the integrity of expensive business equipment and technology could be at risk should a breach in the building envelope or faulty interior plumbing cause a rapid incursion of water.

Wires can cause fires

The electrical wiring in a building can also be cause for concern if it is not properly maintained. Electrical fires remain one of the most common causes of building fires.

Good risk-management preparation is vital not only to prevent fires, but also to control and limit the damages that might occur. A key tool in this process is a pre-fire plan written to assume that a blaze is underway and the moment has come to take active measures to protect people and property.

The pre-fire plan must begin with a complete understanding of the construction, occupancy and floor plan of a building. This knowledge will empower firefighters and other emergency response personnel to execute a rapid and effective response and a more positive outcome.

Major components of any pre-fire plan should include:

  • The layout of the building and surrounding property, including parking lot entrances, building entrances, building key box location, hydrant locations and nearby structures
  • A complete floor plan of each level of the building, including locations of hazardous materials and processes, flammable materials, heating and air conditioning equipment, smoke detectors, utility shutoffs and elevators
  • Pertinent structural features such as building size, height, construction and fire-rated walls
  • Description of occupancies
  • Site features such as occupants with special rescue needs, unoccupied floors, daytime and nighttime occupancy loads
  • Alarm system and related fire-safety information
  • Hydrant information
  • Building fire protection systems

Written fire-response plans must be framed in clear, unambiguous and easy-to-understand language to be as effective as possible. Planning documents must also be readily accessible to fire officials and should be updated on a regular basis.

Slip, trips and falls

Even something as simple as fixing the inevitable sidewalk cracks can help prevent a costly lawsuit from building visitors or passersby who may trip and injure themselves.

Slips, trips and falls can present challenges to owners or managers or nearly all types of commercial properties, but particularly those with public spaces, like retail establishments, hospitals, financial institutions, hospitality venues and others.

In addition to wanting to keep employees, contractors, visitors and the public safe from injuries, property owners cannot ignore the escalating costs of slip, trip and fall incidents and their impact to the bottom line. For slip, trip and fall prevention in their facilities, owners must understand the causes, identify areas where improvements can be made and implement action plans.

After completing a forensic review of a large number of injury cases, Zurich identified key risk factors that commonly result in slip, and fall claims:

  • Surface composition and slip-resistance
  • Foreign substances on a walking surface
  • Surface conditions
  • Surface changes
  • Level changes 
  • Obstructions
  • Visibility
  • Stairs
  • Unusual features
  • Human factors

If a slip, trip or fall incident occurs, property owners must be prepared to mitigate loss by responding quickly, making sure that managers know their roles and what to say, follow up with the injured person after the incident, and determine the root cause of the event to prevent similar occurrences.

Read more about Zurich solutions and risk insights for real estate owners and managers.

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