Systematic Risk Management - Dissertation Example

Whereas a positive risk presents a convenient opportunity to businesses, a negative risk presents a threat to businesses (Bing&Tiong 2012, p. 378). Convenient risks imply progressive outcomes while inconvenient risks imply negative outcomes for a business. Challah andTkiouat(2012, p. 44) argue that even though the construction industry faces minimal random risks, they still have severe consequences including, for example, time overruns, increased costs, and poor quality work. There are numerous factors that are involved in construction from planning to designing to the actual construction and meeting the demands of numerous interest groups, who all need to be managed well in order to ensure the success of the project.

This makes risk management important in reducing or eliminating risk through different processes of risk management (Bing&Tiong2012, p. 378).In Hong Kong and nearly all other most industrialized countries in the world, the construction industry is ranked as one of the largest segments in their economy. In Hong Kong, as of 2015, the construction industry employed nearly 7.3% of the entire population representing 2.9 million jobs across the entire special administrative region (Rhodes 2015, p. 8). In 2015, the Hong Kong construction industry contributed £103 billion to the country’s economic output representing 6.

5% of the entire GDP. With the importance of this industry to the Hong Kong economic sector and the threats brought about by different risks, it is important to understand how different players in the construction industry can ensure risk is well managed.The construction industry has a poor reputation in avoiding risks with most of the ongoing or past projects falling into a shortage of time and budget targets (Analysis for Cause Identification for Delay in Building Construction industry 2016, p. 28). The whole process of managing risks is an important aspect of construction management.

This is because insufficient risk management may lead to delays, performance shortcomings, disputes, poor productivity, and quality issues. Management of risks in the construction industry is not a new idea; nonetheless, it has always involved perception intuition, and experience, which appears to not be working (Baloi 2012, p. 115). Systematic risk management is of utmost importance to help ease the process of identification, assessment, control, and mitigation efforts.