Page 12 - Deconstructing risk
P. 12

The biggest thing – and I talk about this regularly with
our teams – is the fact that you’ve got all this lack of trust
in government, lack of trust in industry, a real trend for
change. Whether it’s Brexit or the American election or what
happened here in Canada, it’s all over: it’s a global trend

                                                                                       —David LeMay,
                                                                                           President and CEO, Stuart Olson

                  Geopolitical issues are                                                                                       For example, North America and
                                                                                                   inherently difficult to      Central & Eastern Europe, Middle
                                                                                                   manage, so it’s no surprise  East and Africa (CEEMEA) have
                                                                                        that construction executives            very different outlooks on how
                                                                                        rank this megatrend as the most         these risks will affect their business.
                                                                                        serious threat to their business.       None of the top ten risks for North
                                                                                        Companies that have operations          America are from this megatrend,
                                                                                        in certain geographies face             while six of the top ten risks for
                                                                                        shifting political headwinds and        CEEMEA fall under it.
                                                                                        daily threats of random violence,
                                                                                        and the unpredictable nature of            “Negative changes to government
                                                                                        geopolitical issues can amplify their   financing, policies and priorities –
                                                                                        negative consequences. The nature       commitment to project pipelines,
                                                                                        of construction work, combined          funding, subsidies, etc,” is the
                                                                                        with the industry’s international       number one risk overall for the
                                                                                        presence, means geopolitical and        construction industry, and also in the
                                                                                        regulatory risks cannot be ignored.     UK, Europe, Latin America and Asia.
                                                                                                                                No other risk from this megatrend
                                                                                           But companies in different           makes the top ten, however. This
                                                                                        markets face very different             suggests that the unpredictable
                                                                                        geopolitical and regulatory realities.  geopolitical situation is more of an
                                                                                                                                overarching factor that raises the
Geopolitical                                                                                                                    likelihood of disruption, rather than
instability and                                                                                                                 being a specific barrier to growth.
regulatory
change                                                                                                                             “Constantly evolving regulatory
                                                                                                                                environment” takes second place,
With political and regulatory upheaval the new                                                                                  and “increased political instability –
normal, construction firms must be adept at creating                                                                            government instability, disruptions
opportunities in unstable environments                                                                                          to travel and trade, unpredictable
                                                                                                                                political regimes, Brexit, large-
10 willistowerswatson.com                                                                                                       scale democratic influence” is
                                                                                                                                third within the megatrend. The
                                                                                                                                regulatory environment has massive
                                                                                                                                influence on the construction
                                                                                                                                industry, affecting macro factors
                                                                                                                                such as access to capital and
                                                                                                                                internal operations, and often
                                                                                                                                increasing costs and complexities.
                                                                                                                                Political instability is likewise seen
                                                                                                                                as a considerable problem in
                                                                                                                                certain countries, where blocks by
                                                                                                                                the government and dangerous
                                                                                                                                territories create logistical
                                                                                                                                challenges, with little possibility of
                                                                                                                                risk mitigation.
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