Building smarter: A strategic approach to risk in MENA construction

While ambition in the region is clear, growth in the area is bringing greater complexity. With larger projects and tighter timelines, it is becoming increasingly apparent that risk is not confined to physical damage or site-based incidents; it’s emerging from supply chains, contractual structures, extreme weather events and more. 

To adjust to the evolving risk landscape, some contractors are beginning to rethink their approach to insurance. Rather than treating it simply as a necessary transaction, they are increasingly looking to use brokers as strategic risk advisors. This foresight is helping them to shape decisions early in the project lifecycle, align coverage with contractual obligations, and reduce their risk exposure.

Core risks facing construction in the MENA region

In a competitive environment, projects often have compressed delivery schedules as developers are keen to bring assets to market swiftly. While this can drive efficiency, it can also increase exposure to delays and contractual penalties, and result in financial strain if things don’t go to plan.

Environmental factors also play an important part in the risks facing the MENA construction industry. With the heavy rainfall and flooding we have seen across the region in recent years most notably the 2024 UAE floods, weather-related events are now perceived less as isolated incidents and more as recognised perils – often interconnected with other exposures, like project delays and cost overruns.

Supply chain dependencies can add further challenges. For projects that rely on imported materials, supply chain disruption can quickly lead to missed deadlines and contractual issues. Ongoing disruption to key shipping routes, including ongoing disruption to global shipping routes and supply chains, has the potential to make this a growing concern.

Contracts: A key component in construction risk

One of the biggest challenges for contractors surrounds the increasing complexity of contracts.

Construction contracts can transfer significant responsibility to contractors across multiple areas of risk. Standard insurance policies can fall short of fully reflecting those obligations, and policyholders often only become aware of gaps in coverage when they make a claim.

Engaging a broker early in the process to review and shape contractual obligations helps ensure they are realistic, insurable, and clearly defined from the outset. 

As a case in point, I recall a project where heavy rainfall led to significant flooding on the site. While the primary damage was covered under the contractor’s policy, the contract required full reinstatement, including debris removal. Unfortunately, there was a sub-limit for debris removal that was lower than the contractual requirement. As a result, the contractor had to absorb a substantial unexpected cost.

When clients engage us early in the project, we can challenge assumptions around what is insurable, advise on risk allocation between stakeholders, and flag liabilities in contracts that insurers are unlikely to cover in full – if at all. It also allows us to build a more complete picture of the project’s risk profile for the client, including stakeholder relationships and supply chain dependencies. 

The benefits of a well-structured programme are often most evident when claims arise – typically through fewer disputes and supporting a more efficient claims process.

Advanced risk analysis in an evolving landscape

Data and analytics are playing an increasingly important role in supporting decision-making. For example, insurers might use natural catastrophe (NatCat) modelling and claims data to assess climate-related exposure in specific locations. 

However, technology is only an enabler – it is not a replacement for human expertise and judgement. While data can highlight potential risks, interpreting the information and applying that insight effectively requires a deep understanding of both construction and insurance. That is why our advisory role goes beyond policy placement. Along with comprehensive risk analysis, we can map potential claim scenarios, advise on how policies are likely to respond, and help clients to document and manage losses to support a more efficient claims process. 

By combining data-driven insights with specialist knowledge, it is possible to identify vulnerabilities earlier in the process and support more informed decision-making from pre-project through to completion.

Local insight: the value of specialist expertise

The MENA insurance market is highly nuanced, and outcomes can vary significantly depending on how programmes are structured.

Navigating this landscape requires more than technical knowledge; it is also dependent on experience and relationships. Rather than applying a broad-brush approach to the market, we focus on the insurers we know have the appetite, capability and track record to support the specific needs of each project.

In practice, this means not only identifying appropriate coverage, but also placing it with insurers with appropriate capability, appetite and relevant claims handling experience.

Building resilience for the future

Looking ahead, I believe the construction industry in MENA will continue to evolve in its approach to risk. There is already a growing recognition that risk advisory should play a key role in shaping decisions from the outset.

For construction firms, this means engaging with risk advisors much earlier in the process, particularly during contract negotiation, and placing greater emphasis on understanding contractual exposures and claims trends.

Ultimately, resilience is built through alignment: between contract and policy, between project stakeholders, and between risk strategy and commercial objectives.

In my experience, an integrated and proactive approach to risk management can help organisations navigate uncertainty and respond efficiently to opportunities emerging across the region.