Investigating Enterprise Risk Management Maturity in Construction Firms

Enterprise risk management (ERM), as a holistic approach to risk management, has been advocated in the construction industry. The objectives of this paper are to assess the ERM maturity in Chinese construction firms (CCFs) based in Singapore and uncover how ERM was implemented in these firms. Through a questionnaire survey with 35 CCFs, the data relating to ERM implementation were collected. The analysis results indicated a low level of ERM maturity in these firms, and the positive association between ERM maturity and firm size. In addition, risk communication, objective setting, and risk-aware culture were the top three scores, while formalized key risk indicators and a risk management information system were the bottom two scores. Moreover, three case studies were conducted. The cross-case comparison results substantiated the survey findings, highlighted the influence of the parent firms on the ERM implementation, and indicated that the firms without formal ERM implementation can still have some practices consistent with the ERM fundamentals. These empirical results are arguably the first to be presented for the construction industry and therefore add to existing knowledge of ERM. In addition, various organizational issues have been identified that may influence ERM maturity. The future development of the ERM body of knowledge can, for enhancement purposes, take into account ERM maturity as well as the organizational issues for implementation. Furthermore, the ERM maturity of Singapore-based CCFs can serve as a ballpark benchmark, with which the other firms can compare in terms of ERM practices, and the similar research design and method can be used to investigate ERM implementation in CCFs located in other countries. Therefore, this paper significantly contributes to the ERM body of knowledge.