Page 9 - Deconstructing risk
P. 9

Emerging markets present                      If you look at the industry that
the most likely source of growth.           we are in, we truly do paint and
Rising competition for projects             bend the skyline. If you think of a
in more stable countries has                tangible deliverable over what is a
forced companies to explore                 relatively short period of time, it is
new opportunities in regions with           phenomenal what gets done
added risks and complexities. And
while infrastructure development                                                         —Leo Quinn, CEO, Balfour Beatty
is crucial in many developing
countries, unstable governments         Fig. 2 | Top ten risks across the construction sector
and threats to national security can
also be prevalent.                      1   Negative changes to government                      39.1
                                            financing, policies and priorities                       39.1
   As construction companies                                                                              39.1
enter new territories, they may         2 Threat from new and emerging competitors
find it more difficult to maintain                                                                             39.7
their working cultures and find the     3 Capital availability, funding and liquidity                               39.9
expertise they need. Workforce                                                                                            40.4
management remains high on              4   Macroeconomic environment
their list of concerns. The industry        uncertainty and inconsistency                                                      40.5
faces a persistent labor shortage,                                                                                                  40.9
so key to success will be in both       5   Overreliance on/failure of
increasing diversity in the current         critical IT systems                                                                          41.9
workforce and attracting the next                                                                                                             47.1
generation of talent.
                                        6 Liabilities arising out of the widespread use of BIM
   New technologies will also offer
opportunities for progress, with        7   Third-party security vulnerability/
sensors, data and analytics, and            Digital supply chain resilience
AR enhancing operations across
the value chain. But as the industry    8   Complexity of the labor market: dependence on
embeds these tools, cyber-security          subcontractors or contract labor
will become a greater issue, forcing
construction companies to protect       9   Increased security threat from cyber-
themselves more efficiently.                attacks and data privacy breaches

   Clearly, a cohesive, continually     10  Necessity for increasingly
updated risk management strategy            diversified business models
is a top boardroom priority if
construction companies are to               10
protect themselves from emerging             9
risks and build competitive advantage.       8
                                             7
Ten-year outlook                             6
Our respondents’ assessment                  5
of the biggest challenges to                 4
their businesses over the next               3
decade focus on a few common                 2
themes: government priorities,                1
diversification, talent management
and innovation. But the most
worrying problem is uncertainty –
not being able to predict a political
crisis or cyber-attack – making risk
management more crucial than ever.

    We hope the Construction Risk
Index 2017 will help our clients,
prospects and strategic partners
better understand the complex
and connected world we work in,
and the risks and opportunities
that lie ahead.

                                                                                                Executive summary         7
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