“Life is uncertain, death is”. We all live in a world of uncertainties and risks, and this happens right from the very first day we were conceived. For example, we risk being born abnormal, robbed or injured, contracting diseases, involve in accidents, facing career failures, being insolvent, etc. As a matter of fact, everything we do have risks associated with it. Risks and uncertainties are like twins, whenever we have uncertainties, we have risks and vice versa. This phenomenon is further compounded by our own ignorance, complacency and presumptions.
The British Standard, BS 4478 defines Risk as “a combination of the probability, or frequency, of occurrence of a defined hazard and the magnitude of the consequences of the occurrence”. In project terms, Risk is “The likelihood of negative occurrences adversely affecting the project, so that its objectives become more difficult or impossible to achieve”. In simple term, it is the possibility of loss, injury, damage and/or other adverse consequences.
In construction, all projects have risks. Risks are increasingly becoming more evident and common in today’s demanding and complex business and project environment. Regardless of whether the party is the client/employer, consultant, contractor, subcontractor, supplier, financier, end user or other stakeholders, the risks on issues such as constraints on project budget and delivery time, commercial and technical difficulties, environmental impacts and contractual implications need to be properly addressed and managed, effectively.