Designing a commercial property risk management strategy built to last

Creating an effective commercial property risk management program is a marathon, not a sprint. But it’s a marathon run on a course which can change at any time, with new and evolving risks that can mean costly detours, played out against a property insurance marketplace itself subject to change. All of which is why an effective property risk management strategy able to protect the organization as market conditions and its own risk profiles evolve needs to be built with a carefully considered strategic, not simply transactional, risk management philosophy.

Following years of rate increases in the wake of an extended period of challenging loss results, the property marketplace in early 2025 transitioned to a more competitive environment. In part, the current outlook is a consequence of hurricane near misses in 2023, 2024 and 2025 natural catastrophe estimates falling significantly short of industry predictions. A midyear prognostication of $150 billion in property losses due to expectations of an active fall hurricane season came in at $107 billion, with fewer hurricanes making landfall on the continental U.S. With ample capital available in the traditional reinsurance markets and alternative channels capitalized to deal with worst-case predictions, a more competitive environment was virtually assured for the first half of 2026, with insurance providers likely to continue to pursue aggressive growth goals.¹

In a market showing some peripheral signs of softening, making significant changes in a risk management program, such as moving to another provider to leverage lower rates, may seem tempting. But taking a transactional view of risk management planning rather than a long-term, strategic philosophy can spell trouble down the road.

Despite short-term perturbations in the prevalence and overall price tag of natural catastrophe events, the fact remains climate and weather patterns are evolving. Severe convective storms generating tornados, hail, lightning strikes, powerful straight-line winds and increasingly unpredictable pluvial flooding are becoming more common and costly. In some regions of the U.S., “wildfire season” has become a 365-day peril. And the term “atmospheric river” producing almost biblical flooding has entered popular consciousness.

Technological change is also raising the stakes of evolving risks. Examples include the expansion of large solar panel installations, super-dense warehousing stacks made possible through advances in robotics, parking garages housing vehicles increasingly reliant on flammable, plastic components, and electric vehicles powered by lithium-ion batteries which can malfunction and cause serious fire losses.

Protecting property in a constantly changing risk environment demands a risk management philosophy supporting a long-term view and an awareness of how the components contribute to an effective, sustainable program over time.

Building a dynamic risk management strategy

At a time of evolving risks, it is critical for every organization to have a comprehensive strategy addressing all known and potential risks. A written plan, not an unofficial set of axioms it is assumed everyone knows.

A plan that clearly addresses maintenance and inspection schedules for all equipment, systems and components, with particular focus on those which may present unique risks. Deep dives and testing of supply chains for replacement materials, equipment and alternative suppliers. And a dynamic document reviewed on an ongoing basis to incorporate new data and to ensure out-of-date information is refreshed or removed.

Once finalized, the plan must be tested periodically, either across the table with all key department players or during actual practice runs to ensure all team members understand emergency procedures, what is expected of them during a crisis, and how to stay safe.

Ideally, the insurer’s risk management and loss control professionals will participate in the development of a comprehensive risk management strategy, providing second pairs of eyes and valuable input as the plan is finalized. Open communication among all key players will help demonstrate the organization’s commitment to an effective and sustainable loss control philosophy, which can mitigate favorably for the organization’s terms and capacity in more challenging market conditions.

Focus on the human element

Any comprehensive risk management program depends on the human element of workers faithfully complying with inspection and maintenance schedules, documenting what was done and when it was completed. For example:

• What impairments, including any affecting fire protection systems, were found; what was done to address them?
• Does the organization have hot-work and fire-watch guidelines in place; are they understood and followed?
• Do team members understand the workings of protective equipment such as hurricane shutters and the deployment of flood defenses?
• Do all employees know where to go and what to do to protect themselves and others during a major event?

Ensure accurate valuations

The most important starting point in any risk management program is establishing proper valuations, not only for the physical facility and equipment but also for business interruption losses. Accurate valuations are integral in modeling potential impacts of loss events, helping risk engineers, underwriters and risk managers model the limits the business needs to protect assets.

The effects of lingering inflation on replacement costs, shortages of labor needed to perform repairs and reconstruction, and supply chain issues in some industries can seriously skew the values at risk. Costs can be further impacted when an older property may need to be brought up to current building codes for a particular jurisdiction.

Accurate valuations also help determine the deductibles applying in high-hazard events and are key in accurately setting policy limits. And correct valuations are also helpful in prioritizing where risk improvements may be recommended.

Ultimately, if loss estimates are off due to inaccurate values, significant exposures may be left unidentified and unprotected, presenting the business with an unplanned retention or an unexpected, underinsured loss.

Never stop improving

Risks change over time. So, organizations need to maintain continuous reviews of their exposures and how they are trending. What controls are in place to identify and deal with evolving risks? What is the organization’s risk tolerance regarding what risks will be retained, improved away or transferred through insurance? What technological innovations are coming online to help prevent and respond to risk in new ways?

Importantly, businesses can also benefit from taking a holistic view of the intersection of property and liability risks. Taking active steps to reduce property risk will help ensure a safer facility, reducing the potential for personal injuries and the financial risks of doing business in this uniquely litigious society.

Relationships matter

Ideally, the development of a long-term risk management strategy is a collaborative effort between the customer and the insurer built on open communication and trust. A collaboration that can help prioritize what matters most in the risk management process over time and how to use available improvement resources and capital to greatest effect.

The insurer’s risk engineering, underwriting and claims teams can provide insights and a broader view of evolving trends, information a risk manager may not have access to while focusing on the everyday priorities of protecting an organization’s assets and employees. This can include specific industry insights from the experience of other customers in the same business segments.

Should a loss occur, rapid reporting to the claims team can trigger a wealth of knowledge and resources to help minimize ongoing and ancillary impacts from a major loss event.

After an event, the customer and insurer need to collaborate in an assessment looking at what components in the strategy worked, what didn’t, what holes may have been revealed, and what exposures may not have been anticipated.

In the final analysis, open, transparent communication among all parties is important both in the development of a comprehensive risk management strategy, and during post-event collaborations to help make the strategy even more effective and resilient against the risks of tomorrow.

For additional insights visit Zurich Property Insights Collection.

Sources

1. Recamara, Josh. “US property market outlook 2026: Competitive rates and emerging opportunities.” Insurance Business. 7 January 2026.