Managing the Risks in Construction Industry's Digital Transformation Journey
Digital transformation in the construction industry, or the use of digital technology to transform services or enterprises by replacing non-digital or manual processes with digital processes or replacing outdated digital technology with newer digital technology, has an impact on every industry.
Firms are moving their back-office activities to work-from-home positions as a result of COVID-19 replies, which are speeding up Microsoft 365 adoption. Working dynamics are encouraging the adoption of new cloud-based systems. The new systems, in turn, open up new possibilities for data analytics to swiftly deliver improved information on job performance, subcontractor performance, and a variety of other financial data.
Artificial intelligence, 3D printing, GPS, robotics, and the Internet of Things (IoT) are examples of modern technologies that are now regularly seen on job sites. This confluence of new technology, as well as existing technologies used in novel ways, represents a huge possibility for corporate growth.
However, such technologies also provide a wide range of concerns that we refer to as digital risks. The greatest risk to your company is not inventing due to concerns about cyber and other threats. The second most significant risk is failing to examine the digital threats that these new technologies pose to your company.
Types of Digital Risks
1. Cybersecurity Risk
We're talking about the threat of cyberattacks here. The goal of these assaults is usually to gain access to sensitive information and then use it for harmful purposes. Extortion and the disruption of routine business procedures, for example. Wire fraud, business email compromise, and ransomware are all hazards in the construction industry.
2. Workforce Risk
Any issue that could jeopardize an organization's aims is referred to as a workforce risk. In other words, talent shortages and excessive employee turnover are two workforce hazards. The attitude of the workforce toward new technology adoption adds to the risk of new technology adoption.
3. Cloud Risk
These are threats to modern digital business processes and IT systems in terms of architecture, deployment, and management. Cybersecurity is undoubtedly a topic of discussion. Cloud infrastructures offer significant benefits when properly managed. They have the potential to produce upward cost spirals if badly managed. Simultaneously, IT teams deploying cloud systems as if they were premise-based architectures frequently introduce unexpected flaws.
4. Compliance Risk
Any additional standards or procedures required for new technology are referred to as this risk. When you implement new technology, you risk failing to meet regulatory standards for company operations, data retention, and other business practices. The majority of compliance risk nowadays is linked to employee privacy. Compliance hasn't been a significant concern for the construction industry because few 2x4s care about their privacy, but it is becoming a bigger issue for enterprises doing business with the defense department or firms mandated by their clients to secure plans, drawings, and other sensitive information.
5. Third-Party Risk
Outsourcing to third-party vendors or service providers carries certain risks. Third-party risks include vulnerabilities in intellectual property, data, operations, finances, consumer information, and other sensitive data.
6. Automation Risk
There will be hazards associated with automation, such as compatibility issues with other technology, a shortage of resources, and governance issues, among others.
7. Resiliency Risk
This alludes to the possibility of undesirable consequences while using new technology and the difficulties in mitigating the damage. The risks to the availability of business activities following a disruption must also be considered.
8. Data Privacy Risk
The ability to secure personal information such as complete names, email addresses, passwords, physical addresses, and even dates of birth poses a risk to data privacy. Hackers can readily utilize this information to hurt or misappropriate an individual's identity.
Managing Digital Risks
The discussion of potential digital risks should accompany the adoption of new technology. "What threats does this technology bring to our company?" you might wonder. "How do we manage or mitigate them?" you might wonder. These questions are a wonderful place to start as long as they are asked of someone who has a thorough awareness of the dangers involved.
As new technologies are chosen and implemented, a more detailed, comprehensive, and cutting-edge methodology, such as risk analysis, should be used. Danger management will raise the chances of successful adoption, lower the risk of unanticipated negative consequences, and provide you peace of mind.
Construction firms are increasingly aware of this potential and intend to increase their investments in digital technologies. As a result, the construction 4.0 market, or digital technologies in building, is expected to grow by roughly $29 billion by 2027. As the construction industry evolves, companies that fail to digitize their operations will lose market share. For organizations that want to prosper, weighing the advantages of digital construction should be a top priority.
The rate of digital transformation is only going to accelerate. It will reshape infrastructure and construction, requiring the industry to anticipate and adapt fast, becoming more innovative and less risk-averse as a result. As new technologies, business models, opportunities, and ideas emerge, we must be ready to welcome them. However, we must be prepared to weigh the rewards against the hazards.