More than 28% of construction contractors across the world believe that inflation and economic volatility happen to be the most significant business risks, which are then followed by increased material costs at 16%, bidding as well as contracting risk at 13%, hiring and retention risk at 11%, supply chain disruptions at 9%, and lastly cybersecurity risk standing at 6%, according to a report by one of the leading insurance brokers, Marsh, and global data provider, GlobalData.
This global construction report happens to note that legal and regulatory risks, insurance as well as surety challenges, environmental and of course climate risks, and also health and safety risks are indeed cited as major concerns.
Apparently, when the businesses were asked about the strategies for managing their firms’ increased risk demands, they went on to reveal a range of methods that are getting executed, with the most common approaches being building robust partnerships with suppliers and subcontractors in order to share risk, which, as per the research, stands at 39%; negotiating stronger contract terms so as to shift risk responsibility at 34%; and increasing contingency budgets so as to cover potential risk-related expenditures at 31%. This report offers an overview of the top risk issues that have been identified within the survey and offers insights on various strategies that the peers in the industry are taking in order to help manage these barriers.
Among the major financial risks, over a quarter of contractors, at 28%, went on to identify the present economic situation along with inflation as being their primary business risk in 2025. The next most cited risk happened to be the increased material expenditure, as mentioned by 16% of the respondents.
In spite of the regional differences within the regulatory environments and also the ease of doing business, the survey outcomes underscored the significance of being selective and, at the same time, evaluating profitability when bidding for projects. Interestingly, over two-fifths of respondents said they were conducting more in-depth prequalification as well as risk evaluations of subcontractors before the bidding begins.
The global construction report when it comes to risks associated with the availability of a skilled workforce, says that a high employee turnover is detrimental to the business, as it impacts not just the financial sustainability but also, at the same time, the employee engagement, productivity, and job expertise. The common reasons when it comes to turnover include poor management, which can leave employees feeling a bit undervalued as well as underappreciated, and jobs that often fail to meet the expectations of the employees.
When it comes to heightened climate along with sustainability risks, respondents go on to anticipate that the climate risks are going to impact their businesses in more ways than one, with rising costs one of the most significant concerns. These risks may come from the need to decarbonize the materials as well as the processes or from more costs that happen to be associated with extreme weather scenarios, such as lost time because of intense rain or extreme heat.
In spite of the recognition of such kinds of risks, the adoption of climate risk management strategies among the survey respondents happened to be low. The most commonly applied strategies happened to include evaluations in terms of physical climate risk within the supply chain along with physical climate risk evaluations, both of which stood at 32% each, followed by the net-zero commitments and targets inclusion within designs and plans at 29%.
The fact is that the construction companies must go ahead and integrate risk modelling all across the project lifecycle in order to identify potential risks, which could very well cause delays as well as damage at the time of promoting resilience against the climate-related barriers. By way of evaluating the physical historical climate data, along with future projections, companies can go ahead and create strategies to decrease the susceptibilities and resilience within the project.