Developing Fuzzy Enterprise Risk Management Maturity Model for Construction Firms

Abstract

Construction firms have been seen as prime candidates for enterprise risk management (ERM) adoption. The ERM maturity assessment helps them to identify weak areas of their ERM implementation and to prioritize resources to improve these areas. The objectives of this paper are to identify the ERM best practices and important ERM maturity criteria in Chinese construction firms (CCFs) and to develop an ERM maturity model for CCFs. Through an in-depth literature review and a questionnaire survey conducted with 89 professionals, a total of 66 applicable ERM best practices and 16 important maturity criteria were identified and thus used in the proposed model. The results indicated that commitment of the board and senior management; risk identification, analysis, and response; and objective setting were the top three most important criteria. In addition, this model adopts the fuzzy set theory to quantify the implementation levels of the best practices. Moreover, this model was applied in a CCF based in Singapore and the output result was consistent with its current ERM practice. Although this paper focuses on CCFs, it helps other construction firms to prepare their customized model using the best practices and criteria identified in this paper, contributing to the global body of knowledge relating to ERM.