Page 3 - Deconstructing risk
P. 3

Methodology

The Willis Towers Watson Construction Risk Index    the next ten years. An independent analyst
was compiled from data and insights derived         collated the data and Willis Towers Watson
from personal and telephone interviews with 350     supported the analysis.
C-suite executives. Survey participants came from
a broad cross section of industry subsectors and       The megatrends represent constituent
geographical regions.                               categories of individual risk. Individual
                                                    risk rankings were generated based on
   The interviews gauged the respondents'           a composite score, which combined the
perceptions to risk in relation to five megatrends   perceived severity of the risk's impact,
established from declarations in annual reports,    multiplied by ease of management (ie, impact
to stock exchanges, and through independent         × ease = combined risk score). The higher
qualified research. The senior boardroom             the score, the greater the perceived risk. A
executives were asked to rank the megatrends        megatrend risk score, independent of the
and their associated individual risks across three  individual risks, ranks each category of risk
time frames: the present, the next 12 months and    by the same method.

                                         THE FIVE
                                      MEGATRENDS

Geopolitical instability              Complex operating                       Workforce management
and regulatory change                 models in a global                      and talent optimization
                                      business landscape

Navigating a shifting social          As projects become global               As the Baby Boomer generation
and political landscape is            and interdependent in nature,           prepares to retire, companies
a constant challenge for              traditional models are becoming         across the construction spectrum
construction executives.              strained. Contractors are being         are facing skills shortages. With
Political instability and             forced to adapt both physical           the industry being transformed
inconsistent policymaking             and labor operations to respond         by advances in technology, the
creates stifling uncertainty,          to a lower margin and more              focus of management is shifting
while the regulatory                  demanding environment.                  away from finding enough people
environment becomes                                                           towards finding the right skillsets
increasingly burdensome.                            Risks resulting from      and backgrounds, and building
                                                    digitalization and new    a workplace environment that
             Business model and                     technologies              retains their most important people
             strategy challenges                                              in an increasingly competitive
                                                                              marketplace.

The pressure is rising on             The unrelenting pace of digitalization  Numerical values
construction executives to build      and technological advancement           in this publication
more dynamic business models          has introduced a whole new              are always
that are capable of responding        dimension of risk. Contractors’ entire  represented to
to an increasingly volatile global    operations now rely critically on       a maximum of one
marketplace. Traditional disruptors   IT infrastructure that is vulnerable    decimal place.
such as fluctuating foreign exchange   to disruption, both incidental and      Calculations in the
and interest rates, the availability  hostile. Simultaneously, contractors    analysis use two
of competitive capital and risk of    are facing a wave of unprecedented      decimal places.
customer default are being joined     liabilities emerging from software and
by new and emerging competitors,      nascent technologies.
adding to industry insecurity about
current business models.
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