NEW YORK CITY—Guiding you through risks and potential underwriting perils, Lance J. Ewing of AIG provides his market-spanning insights. A recipient of the Risk Manager of the Year for Business Insurance and Risk Innovator of the Year awards, Ewing is an internationally recognized authority on insurance, risk management, crisis management and risk financing, among many other insurance and risk-related subjects. At AIG, he serves as the leader for Hospitality and Leisure, as well as the Real Estate Industry Practice Groups.

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Risk comes in many shapes and forms for the commercial real estate owner or manager. Part of an effective risk management program is to be able to identify where these risks come from. The risk categories facing owners and operators are extensive but can be placed under six category headings.

Economic risks are those that arise from the financial day to day operations of a company, the real estate marketplace fluctuations, and the monetary marketplace or risk-taking business decisions. Interest rates, credit and lending, defaults and swaps would be just a few of the risks in the Economic category.

Legal risks are inherent in real estate through compliance or activities from statutory liability. These are the risk governed by the law and the conformity to the laws.

Political risks come from those variations in the law (state or local) or government clarifications of rules or modifications in government policy as it might relate to construction, ordinances or rulings.

Juridical risks come from a jury or judge's decisions related to a real estate or management company's court case.

Social risks normally arise from public relations errors, loss of reputation, and/or damage to the company or management brand. Social risks can be some of the hardest to overcome once the genie is out of the bottle.

Physical risks are the most common risks. These are damage or loss to property, employees, clients, customers, data, or tangible assets. In most cases insurance is an answer for these types of risks.

Knowing the risks facing the real estate industry in 2015 is a good start for the year. For more information contact your agent/broker or insurance carrier.

Instant Insights /

Risk Types: A Breakdown

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