Traditional construction industry’s risk landscape transformed by radical changes in design, materials and processes

The business of construction is risk management. 

Risk is managed by finding and leading the right people through efficient project management. An important part of managing the project is shoring up the supply chain and materials needed to deliver. 

It is as simple and as complex as that.

Whereas offsite and other modern methods of construction have been systematically de-risking over the past decade and a half, the traditional construction industry’s risk landscape since Covid-19 has been transformed by radical changes in design, materials and processes, according to Allianz in an article for the Insurance Journal titled ‘Construction companies to see robust growth and “new age” risks post-Covid’.

According to the above-mentioned article, current shortage of materials and skilled labour add to long-term challenges around new design, materials and building methods driven by sustainability and net zero strategies. Allianz Global Corporate & Specialty, or AGCS, is the Allianz centre for corporate and specialty risks. AGCS analysis of €11 billion worth of construction and engineering claims over five years identifies top causes of loss by value: fire and explosion (26%), faulty design/poor workmanship (20%) and natural hazards (20%).

Managing the new age of construction risk, the company outlined trends to watch as the sector builds back better. These include cyber risk, and the likelihood of extreme weather events as a result of climate change. The digital-first approach taken by offsite and MMC is enabled by technology so cybersecurity is a consideration from the early stages of a project. Also, as offsite manufacturing takes place within a factory-type setting, the period of time onsite where the project is exposed to weather events is significantly reduced.

“Ultimately, modern building and production methods have the potential to radically transform construction, transferring more risk offsite and incorporating greater use of technology…many benefits such a controlled factory-based quality management, less construction waste, a construction timeline cut in half compared to traditional methods and reduced disruption to the surrounding environment.”

The global construction market is set for a period of robust growth post-Covid-19, and Ireland is no exception to this. The undersupply of housing, healthcare and education facilities is driving demand upwards. Also, the increased State and institutional spending on transitioning to more sustainable buildings is strengthening Ireand’s construction pipeline further. 

In the face of this growth and opportunity, the traditional industry is challenged by  currently-stressed supply chains, shortages in materials and labour, and increasing materials cost. The AGCS report, which explores both acute and long-term risk trends for the construction sector, found that: 

“While construction projects continued during the pandemic, the overall environment has changed fundamentally. The industry faces new challenges around supply chain volatility and spiking material costs, skilled workforce shortages and the heightened focus on sustainability. In addition, the accelerated deployment of cost-cutting strategies and implementation of new technologies and designs may well result in accelerated risks for construction companies and insurers alike.” 

The report acknowledges that the strong growth outlook for the sector is based on a number of factors, including government plans for major public investments in large infrastructure projects to both stimulate economic activity after the pandemic crisis and drive the low carbon transition.

About Horizon Offsite

Horizon Offsite Ltd is one of Europe’s leading players in Offsite Construction and Modern Methods of Construction (MMC), providing a fully accredited structural light gauge steel system to the residential, industrial, commercial, healthcare and educational sectors. Contact the Horizon Offsite team at