MANAGING CONSTRUCTION RISKS IN A CHANGING CLIMATE

16:01 30/07/2025 - DepBenVung

MANAGING CONSTRUCTION RISKS IN A CHANGING CLIMATE

With extreme weather events becoming more frequent, industrial investors are now faced with a critical question: How can they ensure factory operations remain safe and stable throughout the building’s lifecycle?

At the workshop “Managing Construction Risks Amid Climate Change” hosted by NS BlueScope Vietnam, three industry experts from KPMG, FM Approvals (USA), and NS BlueScope Vietnam shared practical insights into effective risk management solutions that can help investors build with greater peace of mind.

Climate risks – a growing threat that demands attention

Insights from the workshop highlighted how risks are already present on multiple fronts:

A factory in Da Nang

suffered leaks just 3–4 years after construction due to under-designed load capacity and poor roofing connections.

In Quang Ninh

an older roof structure remained intact after a storm, while the new warehouse extension with thinner roofing panels was blown off.

Over 90% of factories

in Vietnam still face leakage issues post-handover (according to NS BlueScope Vietnam).

Effective risk management: A systematic approach for investors

According to KPMG, risk is constantly evolving - so organizations need a continuous, four-step risk management cycle:

1. Risk Identification – Based on the company’s strategic objectives.

2. Risk Prioritization – By likelihood and impact.
+ KPMG suggests businesses identify the top 10 strategic risks (e.g. climate change, disasters) requiring dedicated management programs.
+ For construction projects, typically 30–35 project-level risks (e.g. financial, HR) are identified for focused management.

3. Risk Assessment & Response

4. Risk Monitoring & Reporting – To detect and act on early warning signals.

KPMG also introduced the use of a risk matrix (heatmap) - a tool that assesses risk based on
> Likelihood
> Severity
Enabling businesses to choose suitable risk-handling strategies:
+ Optimization
+ Avoidance
+ Risk transfer (e.g. asset insurance)
+ Mitigation
+ Acceptance
Climate-related risks, once overlooked, now require reassessment with a higher probability of occurrence - and should be reclassified as strategic risks demanding close attention

Proactive risk control: Insurance & durable materials

Asset insurance, as recommended by KPMG, is a viable way to transfer risk in the event of natural disasters or unexpected incidents. However, for a smoother insurance approval process, it is beneficial for facilities to incorporate internationally certified solutions, such as those recognized by FM Approvals.

One key highlight from FM Approvals (USA) was the FM 4471 certification, which subjects the entire roofing system - including panels, fasteners, insulation, and fireproofing layers - to rigorous tests simulating wind, fire, hail, and load conditions. FM-certified products not only meet technical criteria but are also recognized by global insurers like FM Global as strong candidates for coverage.

In Vietnam, LYSAGHT® SMARTSEAM™ is a roofing solution that has earned FM Approved certification, engineered to withstand high wind loads and prevent leaks, safeguarding buildings during severe weather events.

For example, COLORBOND® steel, featuring advanced AM-Activate™ protective matrix phases technology and a superior paint system, offers enhanced corrosion resistance. While its initial investment is only about 2–3% higher than regular steel sheets, it delivers significantly greater long-term savings, with building lifespans reaching 40–50 years without the need for re-roofing.

As climate risks grow more complex, effective risk management must go hand-in-hand with smart technical decisions - from roofing systems recognized by international insurers to materials built to endure. These solutions lay a strong foundation for investors aiming to build safe, long-lasting, and resilient factories.

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