Truth be told, every industry involves risk. The same can be said for the field of construction. Whether the project involves a multi-million-dollar office building or a three-story apartment complex, there are several risks that need to be considered in order to ensure the success of any construction project. Ever-present risks can delay or completely derail investments. From financial difficulties to fatal accidents, construction risk management is integral in order to secure a company’s survival and eventual growth. 

With that said, construction risk management should be a priority for your company. If you are new to the construction business, the information below should be enough to help you create a risk management plan. 


Construction Risk Management is grounded in identifying the risks that surround the process of construction and devising means in order to avoid or minimize its effects. In construction, a good risk management plan is all about laying down good processes. These processes must be relevant and easy-to-follow. 


Each construction project is different. As such, different risks threaten different construction sites. In order to create an effective risk management plan, identifying possible threats to your operation is important. Below are a few of the most common ones in the industry of construction:

Safety Risks

Otherwise known as occupational risks, safety risks are one of the most common threats in a construction environment. Because of the nature of the industry, workers are exposed to plenty of safety hazards that can not only affect their health and wellness but can also affect the progress of the project. 

Safety risks can include injuries, fatalities, and illnesses brought upon by employee negligence, equipment failure, weather, or other external factors. 

This type of risk should be taken seriously especially considering the worth of an employee’s skills to a construction operation. 

Financial Risks

Financial risks are very real threats to the construction industry because most projects span years. The possibility of running out of cash flow, mismanaging of funds, plummeting economy, increasing cost of materials, and other similar concerns are daunting and real.  Because construction is a long-term game, there are plenty more chances that a project is abandoned altogether because of the loss of funds. 

Environmental Risks

Like any investment, natural risks are an ever present concern. There are effective mechanisms in predicting natural disasters. However, preparing for them is a different story. 

Environmental risks include typhoons, earthquakes, flash floods, avalanches, and the like. 

Project Risks

Also known as management risks, project risks involve hazards like mismanagement of funds, inefficiency, and lack of proper operational guidelines. 

Legal Risks

Most construction projects begin with signing a contract. These legal binding documents detail how long the project would last and how much contractors would be paid. Legal risks can include situations wherein a breach of contract occurs. This might mean that the project ran too long or the workers didn’t get the compensation they were promised. 


Risk management plans often save companies from going under in the event of an emergency. In order to execute one for your own business, below are the steps to creating one:

Identify Relevant Threats

As with any concern, it would be difficult to address the problem if you aren’t aware of the possible issues that may arise. Being prepared for any threat is always better than coming up with solutions afterward. 

With that said, the first step in managing risks is identifying the possible scenarios that may go wrong in the project. This should happen pre-construction and with the help of the entire team. Group-level involvement guarantees that you effectively tackle each concern. During construction, it is a good idea to touch base regarding the emerging risks that weren’t previously discussed. 

Prioritize and Plan

Not all risks are created equal. While it pays to be prepared for them, prioritizing the issues that have the most impact to more people is crucial. There are two factors that need to be considered: the potential risk’s impact and the likelihood that the risk would occur. 

Determine Your Risk Response Strategy

There are plenty of unique construction risks that you might run into during a project. However, for the most part, response to them fall under four general categories:

  • Avoid: For circumstances your team is ill-equipped for, it is best to avoid the issue altogether. For instance, building a low-structure in a flood-prone area is not a good idea and should not get a green light. 
  • Transfer: Again, when ill-equipped it is best to hand-off possible issues to people who have more know-how. For example, if your staff doesn’t do plumbing, subcontract and find professionals who can. 
  • Mitigate: The heart of mitigating risk is training. Because you want the impact of the risk to be as minimal as possible, looping everyone in and giving them the necessary information must be a priority.
  • Accept: Some risks are unavoidable. Instead of denying the situation, it is best to accept and work on getting better. 

Layout your Practical Risk Plan

For the most part, there are three ways to create a practical risk plan. Starting with a strategy from the corporate level can prevent major losses. This includes taking out insurance on the project. Likewise, creating a structure, like forming a risk committee, is also a way to build a risk plan.  At the operational level, it is possible to manage risks by instituting a risk review process and creating an actionable safety program. 

Get People Involved

Construction risks affect everyone involved in the project at every level. Having said that, it is important to get your team involved. Include them in risk assessment meetings and subsequently send an invite to meetings discussing risk management plans. This way everyone is on the same page and all risks are covered. 

Prepare for Plan B

For risks that are unavoidable, it is best to institute a contingency plan in order to finish the project despite the threat. Your Plan B should include practical solutions to the problems that the project is facing. 


As a business owner, a well-thought-out risk management plan can give you the peace of mind that your company would remain intact even in the event of the unexpected. There is no denying how creating a plan can be laborious. However, it is an investment in your company that is worth making. 

Guaranteed Safety 

Your employees are your best assets. After all, their skills enable your vision to come to life. Their safety should be your #1 priority if you want to finish a project. 

Having a construction risk management plan ensures that all threats are discussed and prepared for. You guarantee project completion and you provide your workers peace of mind—a win-win. 

Improved Efficiency

Getting the team involved in creating safety standards allows them to gain confidence in the project they’re trying to complete. Because they are taken cared of, they will do their best. Who doesn’t always want their workers to give 100%? 

Increased Profits

With improved efficiency, you can expect a boost in profits and sales. Because your operation is running like a well-oiled machine, you cut losses that would be brought on by emergencies and accidents. Makes ROI sound simple, doesn’t it?


Creating a construction risk management plan is important if you want your project to finish on time, without any delays or casualties. Nevertheless, you don’t have to develop one on your own. Professionals like the Safety Services Company can help make the process easier for you. 

To learn how we can help with your company’s construction risk management needs, check out our products and services here or call us at (866) 329-5407 today. Remember, your one call could save lives and improve your ROI.

From the blog

We've put together a collection of useful tips, articles and guides based on our dealing with safety and compliance on a daily basis. From the latest OSHA changes to seasonal quick tips, we've got you covered. See all blog articles