Three cranes rise above a London construction site. In a high-pressure market, the risk of construction firms loosening their risk-management policies can grow.
Photo: Niklas Halle’n/AFP/Getty Images
Pressure on construction markets in developed countries has been growing since the global financial crisis: Slower economic growth, high market fragmentation and competition, and low barriers to entry are all contributing to thinning margins. In such an environment, the temptation for management teams to slacken their risk-management policies, aggressively underbid on projects or even begin shrouding their bad debts within the balance sheet can…
