Concept Of Risk In Construction Industry

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3.1 General risks

The meaning of risk changes when time goes on and the meanings differ when they are at the specific socio-cultural and historical contexts which we are located in. (Deborah Lupton, 1999) Risk is exposure to the possibility of economic or financial loss or gain, physical damage or injury, or delay, as a consequence of the uncertainty associated with pursuing a particular course of action (Cooper, Chapman, 1987).According to Cornelius Keating, risk is not the present problem which should be immediately addressed, but it is considered as future issues that can be avoided or mitigated. Risk is considered as a situation which may lead to negative consequences. Generally, six major categories of risk can be identified as the most important concerns for the majority. They are:

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Environmental risks, including pollution, radiation, chemicals, floods, fires, dangerous road conditions and so on;

Lifestyle risks, which related to the consumption of such commodities as food and drugs, engagement in sexual activities, driving practices, stress, leisure and so on;

Medical risks, which related to experiencing medical care or treatment. Such as drug therapy, surgery, childbirth, reproductive technologies and diagnostic tests;

Interpersonal risks, related to intimate relationships, social interactions, love sexuality, gender roles, friendship, marriage and parenting;

Economic risks implicated in unemployment or under-employment, borrowing money, investment bankruptcy, destruction of property, failure of a business and so on; and

Criminal risks are those risks emerging from being a participant in or potential victim of illegal activities.(Deborah Lupton, 1999)

3.2 Risks in Construction Industry

3.2.1 The Concept of Risk in Construction Industry

The construction industry experienced a wide variety of risks which may occur in financing, designing, constructing and managing facilities of a project. There are different definitions of risk in construction industry. In order to understand the process of risk management, it is important to understand the basic concept of risk in all aspects. The international standard “Project risk management – Application guidelines� holds the theory of probability and consequence and defines risk as a combination of probability of an event which is occurring and its consequences to project objectives (IEC 2001). Ward and Chapman (2003) have made a broader definition of risk and suggest using a more general concept of uncertainty. They argue that risk is considered as threats but not opportunities and when it occurs it affects the project performance. Edwards (1995) points out that risks have a negative impact on the project’s cost, quality or time in most situations. These definitions have a common feature: they define risk in terms of uncertain events and may have positive or negative impact on a project’s objectives.

According to An (2010), risk interpretations can be considered as the following:

The same as the word ‘hazard’

The consequence of an unwelcome outcome or failure

Chances of achieving a given outcome

Signifies danger

Taking a chance in an activity

An (2010) argues the term risk can be defined in the two components: the probability of occurrence of the risk and the magnitude of the consequences if the risk happened.

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