QBE North America, an insurance company based in New York City, asked 500 commercial general contractors and construction managers to identify the risks that threaten the commercial construction sector.

The No. 1 risk, according to 42% of respondents, is cybersecurity. Rounding out the Top 10 are cost overruns, high interest rates, labor shortages and the economic downturn. Perhaps not surprisingly, they are the same risks—albeit in slightly different order, with the economic downturn moving up to second on the list—that the respondents feel least prepared for. This appears to be an even greater concern for small- to mid-sized construction companies that typically have less financial capacity than larger firms.

“The top risks keeping respondents up at night are also the risks they are least prepared for,” said Ryan Powers, senior vice president and head of construction at QBE North America. “Therefore, the findings in the report suggest a gap between awareness of risks and readiness to mitigate them.”

The principle areas of cyber risk for contractors consist of phishing threats and third-party software providers. To alleviate danger, the report recommends that companies train their employees on best cybersecurity practices and work with their IT experts to pinpoint vulnerabilities and routinely update software and operating systems.

When it comes to labor shortages, simply hiring more people is not always the best answer. Workers with little experience can be the reason behind increased injuries, quality issues and equipment damage. Powers suggests improving hiring practices to screen for experienced candidates. Once the right employees are hired, he advises a comprehensive orientation, a safety plan review and regular monitoring of progress.

Interest rates, labor costs and materials prices continue to climb, putting construction projects in jeopardy. The report urges companies to review budgets in an attempt to get out ahead of cost overruns on projects that are already underway, and to add contingencies in contracts for future projects to alleviate potential pitfalls.

“Mitigating the potential impact of these risks requires an ongoing commitment and proactive measures to ensure a more efficient, safer and resilient futures,” Powers concluded.