Strategic Risk Management Practice in International Construction Companies in Ethiopia

Abstract

Research Purpose: To analyze the strategic risk management practices of Ethiopian International Construction Company, identify its effective methods and shortcomings in risk identification, assessment, and response, and provide support for optimizing the risk management system, enhancing global construction market competitiveness, and strengthening risk resilience. Research Objective: To evaluate the strategic risks faced by multinational construction companies operating in Ethiopia, analyze their current strategic risk management strategies and processes, assess the effectiveness of existing risk management measures and implementation challenges, and develop a comprehensive strategic risk management framework tailored to Ethiopia's national conditions. Research methodology: The study employed an interpretive sequence mixed method, combining qualitative and quantitative approaches. During the quantitative phase, a Likert scale questionnaire was distributed via professional networks to 60-80 project management experts for data collection. In the qualitative phase, purposive snowball sampling was used to select 15-20 corporate executives and project managers for in-depth interviews and case studies, with data processing and thematic analysis conducted using SPSS and NVivo 12. Research Findings: The core risks identified are inflation risk, foreign exchange control risk, and policy change risk, all scoring above 4.5 in importance. Companies primarily mitigate these risks through measures such as securing long-term contracts for material reserves, collaborating with banks, and enhancing government communication. The adoption rate of government communication strategies reaches 80%. Effective risk management can reduce project cost overruns to 12%-18% and shorten construction delays by 4.5-6.3 months. Key implementation barriers include insufficient executive support, poor communication with local partners, and a shortage of risk management professionals. Conclusions and Recommendations: Multinational construction companies operating in Ethiopia face unique cross-border risks. While current risk management strategies have demonstrated partial effectiveness, their implementation remains constrained by internal and external factors due to the absence of localized end-to-end lifecycle frameworks. To address these challenges, enterprises should: (1) Establish country-specific risk profiles, (2) Build localized management teams, and (3) Develop diversified supply chains. Meanwhile, Ethiopian policymakers need to enhance policy transparency and streamline customs and foreign exchange procedures. Furthermore, industry associations should create risk knowledge-sharing platforms to foster multi stakeholder collaboration and strengthen sector-wide risk governance capabilities.