The following supplements a panel discussion led by Michael Gibson at ALFA International’s 2014 Construction Seminar, “Survival of the Smartest: Prospering Through Technology, Innovation and Adaptation in an Evolving Market” held at The Grove Park Inn, Asheville, North Carolina, on July 30-August 1, 2014.
The construction industry is highly risk prone. Since the days of Hammurabi, the construction industry has faced some of the greatest risks of all businesses and disciplines—safety, poor weather, collections, litigation, and numerous, overlapping regulations, to name a few. Not only is the industry vulnerable but it also has a disappointing record in coping with risks. Disappointing because many known risk factors are readily identifiable.
As the United States continues its trek out of The Great Recession, managing construction’s internal and external risks remains paramount for the success of all stakeholders: owners, builders, designers, engineers, insurers and sureties alike.
Risk has many faces. It can be a threat or an opportunity. It can be known or unknown, predictable or unforeseeable, quantifiable or simply subject to gut instincts and intuition. No matter the shape or form it takes, risk must be accepted, accounted for and addressed.
Risk management is designed to reduce or eliminate the risk of certain kinds of events happening or having an impact on a business. This requires a proactive (as opposed to reactive) approach, as the success or failure of any enterprise is often determined in the planning stage, not after risk’s consequences have resulted in a claim or lawsuit.