71% of organisations see cyber threat as greatest insurable risk– survey

There's a lack of risk management data available for real estate managers.

The scarcity of risk management data, which hampers a manager's ability to assess, address, and mitigate risks across asset portfolios, is amongst the multi-faceted challenges in risk management for real estate entities.

Ben MacCarthy, Head of Real Estate, Hospitality & Leisure in Asia at WTW, said this concern is echoed by 69% of respondents in the Asia Pacific from WTW's global real estate survey, indicating a widespread issue in the industry. 

“For managers, the challenge is knowing if there are any gaps in your company or companies' insurance programs, particularly where losses have been experienced,” he said.

Furthermore, the exposure to uninsured risks presents another significant hurdle, with more than two-thirds of companies grappling with uncertainty in their insurance coverage. This uncertainty is especially pronounced concerning extreme weather events, highlighting the need for thorough insurance coverage reviews.

Another critical challenge MacCarthy pointed out is the lack of buy-in from boards and stakeholders for risk management programs, underlining the necessity for real estate managers to secure broader support for their initiatives.

“So we've seen an increasing trend of real estate companies adopting new technologies across their assets and their portfolios, stretching from warehousing, residential, commercial and industrial asset types,” he explained.

He suggested assessing security controls, conducting regular security audits, and ensuring ongoing employee training to combat emerging cyber threats effectively. These strategies are crucial for defending against cybercriminals looking to exploit new vulnerabilities introduced by technological advancements.

Looking ahead to 2024, MacCarthy advises real estate managers to focus on sustainable practices and retrofitting properties for energy efficiency and green certifications. These measures not only mitigate the risk of asset obsolescence but also enhance the appeal of properties to environmentally conscious tenants. 

He further recommended regular asset valuations to ensure accurate insurance coverage and to empower managers with the data needed for informed risk management decisions.

MacCarthy concluded by highlighting the benefits of a healthy asset portfolio underpinned by proactive risk management, including maximised opportunities for stakeholders and investors and improved attractiveness to tenants. A comprehensive risk profile with appropriate insurance coverages is essential for navigating the complex landscape of insurable risks in the real estate sector.