Risk Radar: Revolutionising supplier risk management in construction

Recent figures released by the Construction Leadership Council (CLC) show the number of insolvencies in construction across England and Wales has been steadily climbing during the last four years. In fact, figures show there were 4,378 construction administrations in 2023, a 36% increase on the pre-COVID 2019 figure of 3,218. So, what’s going on? And how can you protect your business, with a supplier risk management tool?

In this blog, we’ll take a look at some of the key insights from the CLC’s industry insolvencies data, consider some of the key causes and detail how Constructionline’s Risk Radar can help businesses tackle supplier risk management in construction.

Complex reasons behind the data

As well as documenting the total number of construction insolvencies, the CLC’s research examined 89 of those firms, to try and shed some light on the complex causes behind company failures. This led to the identification of 434 causes across 39 broad categories.

The report found the leading causes were:

• COVID
• Cost inflation
• Cash flow

Other common causes include project delays, HMRC, non-payment, loss-making projects and turnover reduction. This reflects the difficulty of the current economic and political landscape.

With no single leading cause, it also makes responding to these a challenge for companies. Where should mitigation efforts be focused? How can you best defend against these varied risks? What is clear, however, is that a comprehensive approach to risk management is imperative.

How Risk Radar can help

The CLC data underscores the urgency for proactive risk management in construction – and this is where Constructionline’s Risk Radar comes in. Offering a comprehensive approach to supplier due diligence and risk mitigation, it’s tailored to address the specific challenges facing the UK’s built environment. 

One of Risk Radar’s standout features is its ability to provide unparalleled visibility into your supply chain dynamics. Through proprietary algorithms, Risk Radar generates real-time risk scores that are recalculated weekly based on live data inputs. This enables proactive monitoring, allowing businesses to swiftly identify and address potential disruptions before they escalate. By leveraging this continuous monitoring capability, you can enhance resilience and maintain operational continuity, even in turbulent market conditions.

The insights provided by the CLC emphasise the critical importance of cost optimisation and adherence to environmental, social and governance (ESG) criteria in supplier management too. Risk Radar lets you access supplier financial health data and corporate relationship insights to help you optimise procurement processes. As a result, Risk Radar enables businesses to achieve significant cost savings while ensuring ESG compliance. In the construction sector, this dual focus on financial efficiency and sustainability is key to long-term success.

Strategic advantages across departments

The CLC’s data highlights the various causes of company failure, underscoring the need for strategic alignment across organisational functions. Risk Radar can play a pivotal role in facilitating this, by delivering actionable insights tailored to specific departments. From bid teams aiming to assess supplier risk before submitting proposals, to finance departments needing to safeguard against financial instability, Risk Radar empowers informed decision-making at every level. By mitigating risks effectively, Risk Radar helps optimise operations and foster a culture of proactive risk management throughout the organisation.

The future of supplier risk management

Unfortunately, construction companies are vulnerable to volatility and uncertainty – and it’s not always possible to predict some of the factors which lead to this. That’s why mitigation solutions like Risk Radar become so essential to supplier risk management. By giving businesses the tools to transform risk into opportunity, Risk Radar lays the groundwork for sustained growth and success in the construction industry.

Ultimately, Risk Radar offers forewarning and resilience to construction businesses. It presents a data-driven supplier risk management approach, tailored to construction industry needs. Of course, it can’t predict the next geopolitical shockwave, but it can prepare your business, so you’re ready for it. Risk Radar really is the future of construction supply chain management, where diligence meets data, and invaluable insights lead to powerful growth opportunities.

Find out more.

SOURCES:

1: https://bcis.co.uk/insight/how-can-construction-data-reduce-the-risk-of-insolvency/

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