Transform how you think about risk management
Within the construction industry, risk management ensures the successful achievement of project deliverables. It enables organisations to plan for uncertain and unexpected events, leading to better preparation and increased profit margins.
The real potential to getting the most out of your organisation requires using risk management proactively, using it to drive performance management and propel your business forward. The transformation that risk management brings is through a new mind set of strategic thinking. This is about moving away from short-term myopia towards encouraging medium-term stability through to establishing long-term resilience and positive change.
Risk management fosters confidence in the way your construction organisation operates. So, you can demonstrate the proactive, considered approach at the heart of your business. This can extend to managing organisational reputation too, working with internal and external stakeholders, from clients and auditors through to shareholders.
Develop a risk management strategy
The construction industry faces a set of unique challenges around developing a risk management strategy. One of the biggest challenges is lack of a risk decision-making structure and lack of accountability. The lack – or even absence- of an open risk-aware culture, together with engaging all the involved parties, compounds the challenges within the sector.
The big picture here is building a successful risk management strategy that will improve your business’ performance. This has to start from the top – whatever the size of your business; a proactive risk management culture requires senior management sponsorship, so this is essential to success. Take proactive mitigation action where it’s most cost effective, and have sound fall-back plans in place. This exercise ensures you have that full understanding around risk and are well prepared. Agree and use meaningful metrics for monitoring the effectiveness of risk management. Build on lessons that have been learnt – from across the construction industry and within your own business – relevant to the context of your business and its aims.
Transition your risk culture
As with other industries, to transition your risk culture in construction, risk management must be part of your organisation’s overall planning and procedures, rather being a stand-alone document.
The more your organisation makes sound risk-based decisions e.g. which projects to bid for or decisions to ‘no bid’, the more you can demonstrate business confidence. Risk management offers a powerful approach to developing resilience to uncertainty and future change. Knowing you have a robust decision-making infrastructure in place means you can be confident that over the long-term it supports ongoing business performance.
From a cultural perspective, this is about rewarding people for making strategic risk-based decisions that bring benefits to the wider organisation. It’s a proactive approach that considers the short, medium and long-term view of risks – and opportunities. Strong leadership and a commitment to engaging everyone in the organisation is a winning theme here. A step-change is the willingness to take known risks, as these are vital to progress and growth in your business.
Engage at all levels
This is one we invest a lot of energy in. A risk strategy can only be as successful as its ability to engage right across the business. At a recent roundtable, our customers stressed the importance of boosting engagement by recognising what makes people tick. By connecting to the human benefits that risk brings, to improve confidence and connection, instead of simply hitting people with scary data, you can tap into those opportunities and close the gap on risk engagement.
Engage your supply chain
In construction, risk management must be part of internal supply chain plans and procedures. This allows you to establish a clear and unambiguous risk management framework. Vitally, this will help such disciplines as logistics or procurement to easily integrate their internal systems with the risk register and effectively manage any relative uncertainties.
Engage your supply chain in proactive risk management. Encourage and incentivise them to demonstrate that they can deliver on great risk management practice, strengthening your ability to win and deliver long term business. Make sure that your supply chain isn’t going to let you down by failing to deliver the quality you expect, on time and to budget. Equally making sure they share your business practices will minimise any threats to your reputation.
Successful delivery is dependent on the weakest link in the chain and all too often we see supply chains let customers down. Engagement, due diligence and making your supply chain part of the positive, opportunity management side will really boost the way your business operates.
Article supplied by Val Jonas, Risk Decisions.
If you would like to read more articles like this then please click here.
- Putting wellbeing at the top of the agenda
3 Aug 18
Steve Noble, Chief Operating Officer at Ultimate Finance, talks mental health in the industry.
- When will the construction industry embrace digital transformation?
30 Jul 18
Digitisation will transform the construction industry, so why are so many companies resisting it?
- SMEs: building the future
23 Jul 18
Small and medium-sized enterprises are a vital ingredient to help drive better performance from our