Housing company risks and risk management: a guide for the board
In this article
Risk management in a housing company is about more than insurance and water damage. It also covers the technical condition of the building, finances, safety, decision-making, contracts and how information flows between the board, the property manager, the maintenance company and the shareholders.
The biggest costs rarely come from a single unexpected incident. More often, a small problem goes unnoticed or is dealt with too late: a small roof leak soaks the loft insulation for years, a loose electrical connection overheats, or poor documentation makes it harder to plan repairs.
An unknown risk never makes it onto the agenda
A housing company may look in perfect shape even though a piece of equipment in a technical room is at the end of its service life, a roof penetration is leaking and nobody knows whether the foundation drains are working. The board can respond to a problem it knows about and commission a study of something that is unclear. If nobody knows that a matter even needs looking into, no decision is ever made.
What the law requires of the board
The Limited Liability Housing Companies Act (asunto-osakeyhtiölaki, 1599/2009) does not use the term risk management. However, the board must organise property management and the supervision of financial management properly (chapter 7, section 2), and the board and the property manager must act with due care to promote the company’s interests (chapter 1, section 11). In practice, careful property management requires significant risks to be identified.
A board member may have to compensate for damage they have caused in their role, intentionally or through negligence, by breaching the duty of care, the law or the articles of association (chapter 24, section 1). Liability is not automatic for every incident that happens in the building; what is assessed is whether the duties were carried out with due care. Read more: the responsibilities of a board member.
Board members do not need to be experts in construction, plumbing and HVAC or electrics. When their own expertise is not enough, they bring in an expert. What matters is whether the board knows what it needs to find out before making a decision. Nor does due care mean predicting everything: a board can make a sound decision on the information available and still face an unexpected problem later.
Technical risks
Roof leaks. Even a small leak can cause moisture damage to the loft structure and the apartments. Keep an eye on the condition of the roof covering and penetrations, whether the gutters work, snow loads and moisture marks in the loft.
Pipe leaks. Ageing water supply pipes and drains can leak for a long time inside the structure. Signs include higher water consumption, damp surfaces, unusual smells, darkening floors and blistering paint.
Wet rooms. Ageing waterproofing and blocked floor drains are a common cause of water damage. They only come to light when the apartments are inspected one by one.
Electrics. Loose connections, outdated installations and dusty distribution boards increase the risk of overheating and electrical fires. Main and sub-distribution boards, car heater posts and charging points need particular attention. See electrical safety in a housing company.
Ventilation and indoor air. Ventilation that does not work properly worsens indoor air quality and increases the risk of moisture problems. Investigating long-running indoor air problems can take years.
Facade and balconies. Cracks and loose parts can be a safety risk. On balconies, deteriorating concrete, railing fixings and drainage can lead to extensive repairs if they are not dealt with in time.
Foundation drains and rainwater. Blocked gutters and downpipes direct water into the structure, and foundation drains that do not work let moisture into the foundations and basement. Cleaning the gutters every year is a cheap way to prevent an expensive foundation repair.
Safety risks
Fire safety. Escape routes, fire doors, first-aid firefighting equipment and the rescue plan form a whole. From 1 January 2026, smoke alarms are the housing company’s responsibility, so the board must ensure that every apartment has enough working alarms. Read more about fire safety in a housing company.
Civil defence shelter. Under section 76 of the Rescue Act (pelastuslaki, 379/2011), the civil defence shelter and its equipment must be kept in such a condition that the shelter can be brought into use within 72 hours. If the shelter is used for other purposes, emptying it must be planned in advance.
Paths, railings and lighting. Poor winter maintenance causes accidents and possible compensation claims. Railings, steps and outdoor lighting are worth going through at least once a year.
Keys and data security. Lost keys weaken the security of the property, so the key register is kept up to date and replacing the locks is considered if keys go missing. Electronic maintenance logs, access control and camera surveillance require careful management of access rights and proper handling of personal data.
Pests. Rats and mice cause health and building problems. Act on the first sightings quickly.
Financial and administrative risks
Insurance cover. Insurance does not remove a risk, but it reduces the financial consequences of damage. Cover is checked regularly, especially after major repairs. See housing company insurance.
Under-budgeting and postponement. If the company does not prepare for upcoming repairs, the result is emergency fixes and unexpected increases in the maintenance charge. A small repair can easily become a big one when it is put off from year to year without reassessing the risk. Read more about the repair backlog.
Unpaid charges. Unpaid maintenance charges weaken liquidity. Collection is pursued consistently and in good time.
Contracts and projects. Outdated maintenance, service and construction contracts may contain terms that no longer serve the company. A poorly prepared repair project leads to delays, additional work and budget overruns.
Information and dependence on individuals. Nobody has an overall picture of the building, old reports cannot be found or the maintenance company’s observations do not reach the board. A long-serving chair knows where there have been water problems and what has been done to the roof, but when they step down, that knowledge is lost if it has not been written down. Read more: information management in a housing company.
Damage gives warning signs in advance
Major damage feels sudden, but the signs have often been visible for a long time: a leak appears in the roof, the distribution board gets warm, slight damp appears in the basement, a crack forms in the balcony concrete or the stairwell keeps smelling. A single observation does not necessarily mean danger, but it is worth recording, assessing and, if necessary, investigating. An observation is not a diagnosis: a moisture mark does not tell you what kind of damage is involved, only that the matter needs to be looked into. Read more about hidden defects in a housing company.
An annual model
The following are practical recommendations, not statutory obligations. Risks change as the building ages, and charging points, new energy systems and changing weather conditions bring issues that did not need thinking about a few years ago.
- A risk review once a year. Go through the risks, for example when preparing the maintenance needs report, and assess the likelihood and impact of each risk. Prioritise accordingly.
- Rounds and inspections. A regular building round, servicing of technical systems and, from time to time, going through the apartments as well.
- Documentation. Observations, inspections and repairs are recorded in the maintenance log (huoltokirja) so that the information is passed on.
- Link to plans. Identified risks are fed into the maintenance needs report and the long-term plan.
- Clear reporting channels. The board, the property manager, the maintenance company and the shareholders know who to report observations to and how they are dealt with.
A review is also worth doing in connection with major repair projects, technical changes and unusual observations.
Questions to test the board’s picture of the situation
- What are the three most significant technical risks in our building?
- When were the key parts of the building last inspected?
- Has any repair been postponed several times?
- Is any important decision based on outdated information?
- Is any critical information held by just one person?
- Do all board members have the same view of the building’s condition?
- When were the apartments last systematically gone through?
- Does the maintenance needs report reflect the current state of the building?
- What do we not yet know, but should?
Frequently asked questions
What is the biggest risk for a housing company?
The biggest risk depends on the building’s age, condition, systems and finances, so there is no single answer for every company. Common causes of expensive damage include unnoticed leaks and moisture damage, faults in electrical systems and delayed repair decisions.
Where should risk management start?
With up-to-date information on the condition of the building. The apartments are the hardest part to monitor because the board cannot see inside them. Information on their condition comes from an apartment round.
This article provides general information and does not replace case-specific legal or technical advice.
