1.

Introduction The construction industry is among of the industries which are exposed to a lot of predictable and unpredictable risks that may have a greater impact on the

productivity, performance, quality and the budget of the project. Therefore, in order to ensure the successful of the project, there should be a proper and systematic risk management strategy in place in order to manage the risk in the most efficient manner.One of the challange for construction industry in Malaysia is corruption. Corruption in the global economy is a fact. Transparency International the global anti-corruption organisation publishes a Bribe Payers Index, which identifies industry sectors most likely to bribe a public official and identified the construction sector as the most corrupt worldwide. Estimates of the amount lost globally to corruption in infrastructure procurement lie at US$ 3,200 billion per year. Corruption in construction industry can include bribery, extortion, fraud and other equivalent criminal offences.

2.0

Risk management Risk management is a logical process or approach that seeks to eliminate or at least minimize the level of risk associated with a business operation. Risk management is an important concept that many employees, managers, and stakeholders refer to when they are concerned about the effects of a certain move on reaching key objectives.

There are three primary goals that risk management offers to those who use it, and these three goals are: To combine concerns which are related to the risk of the organization's regular decisions, and the creation of the implementation process. To place a heavy emphasis on the allocation implications of resources. To develop an understanding of both the trade offs as well as the opportunity costs that come with any given decision.

Risk is defined as anything which poses a threat to an organization. Risk management is the process of dealing with these threats. 3.0 The importance of risk management for preventing corruption A risk management approach to corruption prevention is appropriate because it helps to identify structural weaknesses that may facilitate corruption, provides a framework for all staff to take part in identifying risk factors and treatments, and embeds corruption prevention within a well-established governance framework. All sector organisations are exposed to corruption risks, and some functions (such as licensing) carry substantial risks that cannot be transferred or eliminated. A risk management approach is the most appropriate way to ensure that these risks are identified and effectively managed. 4.0 Risk management concept to preventing corruption on construction projects

4.1

Risk identification Internal and external events affecting achievement of an entitys objectives must be identified, distinguishing between risks and opportunities. Opportunities for corruption are channeled back to managements strategy.

Corruption can only occur if there is an opportunity for the giver and the receiver. ldentification of the opportunities that exist in the construction industry to eliminate opportunities for corruption there playing this game.

Risk identification process identifies and documents risks that might affect the project including curroption. Project manager, team members, subject matter experts, customers, end users, other project managers, stakeholders, and risk management experts are involved in risk identification . By assess vulnerability and identify corruption risk facctors, we can prevent corruptions from occur.

Some methods of identifying corruption risks Past organisational experience Annual audit results and Results of audits / physical inspections Records of prior losses Staff and client/customer complaints.

Ask employees to identify ways that existing controls could be bypassed i.e. flaws in the system. Tap into their expert knowledge and judgment

4.2

Conduct focus group discussions Distribute surveys and questionnaires Ask staff to complete risk forms/identification sheets Directly observe workplace activities

Risk analysis Risks are analyzed, considering likelihood and impact, as a basis for determining how they should be managed. Risks are assessed on an inherent and aresidual basis. Risk analysis should be performed as part of the risk management process for each project. The data of which would be based on risk discussion workshops to identify potential issues and risks ahead of time before these were to pose cost and/ or schedule negative impacts The risk workshops must come from various departmental functions (e.g. client,project manager, construction manager, site superintendent, and

representatives from operations, procurement, project controls, etc.) so as to cover every risk element from different perspectives. The outcome of the risk analysis would be the creation or review of the risk register to identify and quantify risk elements to the project and their potential impact. 4.3 Risk Response PMBOK define risk response as developing options and actions to enhance opportunities, and to reduce threats to project objectives and also called risk treatment. Appropriate steps takenor procedures implemented upon discovery ofan

unacceptably high degree of exposure to one or more risks. Management selects risk responses avoiding, accepting, reducing, or sharing risk developing a set of actions to align risks with the entitys risk tolerances and risk appetite. Treatment options Treatment options for corruption risks include:

amending existing procedures)

controls

(supervision,

systems,

policies

and

introducing new controls introducing new methods of detecting corrupt behaviour that could result from a particular risk.

The chosen treatment for any risk could be a combination of the above options. For example, the best treatment for a particular corruption risk might be amending an existing control (e.g. improving a current policy) and introducing a new detection method (e.g. improved supervision and checking processes). Agencies need to consider the best option in terms of cost, effectiveness and feasibility.

Corruption risk treatment plans After selecting all the risk treatment strategies, we should prepare a corruption risk treatment plan which describes how the selected treatment options will be implemented. It should include: proposed actions resource requirements responsibilities timeframes performance measures reporting and monitoring requirements.

Corruption is from those in power and authority. Therefore, the main task for uprooting corruption is to eliminate the unnecessary power and authorities, optimize the administration approval process and let the market make adjustments;

Establish a complete and detailed supervising procedure to allow the supervising officials work proactively, positively, continually and

independently, and to avoid administrative interference and at the same time, protect the innocent public. 4.4 Risk planning

A Risk Management Plan is a document prepared by a project manager to foresee risks, to estimate the impacts, and to create response plans to mitigate them. It also consists of the risk assessment matrix. Most critically, risk management plans include a risk strategy. Broadly, there are four potential strategies, with numerous variations. Projects may choose to: Accept risk; simply take the chance that the negative impact will be incurred Avoid risk; changing plans in order to prevent the problem from arising Mitigate risk; lessening its impact through intermediate steps Transfer risk; outsource risk to a capable third party that can manage the outcome

4.5

Risk monitoring The entirety of enterprise risk management is monitored and modifications made as necessary. Monitoring is accomplished through ongoing

management activities, separate evaluations, or both. Risk management is a process of organizing and planning - just as important as strategic, financial, marketing and human resources planning. Like any good planning, the process should be continual or on-goin Once basic risk management plan is in place, monitoring risk means to review it and update it continuously.

Identify new risks as soon as possible Decide where and how to handle that risk Look for other risks that might be reduced or eliminated and no longer need coverage

Check operating volumes - they change so that coverage levels need to change

Risk monitoring control is performed at the concept phase of the project and ends at the close-our phase. It should be included in the regular communication process of the project. The organizations monitoring and review processes should encompass all aspects of the risk management process for the purposes of: analyzing and learning lessons from events, changes and trends;

detecting changes in the external and internal context including changes to the risk itself which can require revision of risk treatments and priorities;

ensuring that the risk control and treatment measures are effective in both design and operation; and identifying emerging risks.

Reference Norazian Mohd Yusuwan, Hamimah Adnan & Ahmad Faris Oma. Clients Perspectives of Risk Management Practice in Malaysian Construction Industry

Howard Kunreuther. Risk Analysis. Center for Risk Management and Decision Processes The Wharton School University of Pennsylvania

INTERNATIONAL ORGANIZATION FOR STANDARDIZATION. Risk management Principles and guidelines on Implementation

Central Vigilance Commission Construction

Government of India -Problem Areas

of

Corruption in

Anna Klemetti .Risk Management in Construction Project Networks. Helsinki University of

Technology Finland
Patrick X.W. Zou , Strategies for Minimizing Corruption in the Construction Industry in China. Journal of Construction in Developing Countries, Vol. 11, No. 2, 2006

A Guide to the Project Management Body of Knowledge (PMBOK Guide)

Risk Analysis & Their Management in Construction World http://www.scribd.com/doc/48757018/Risk-MAnagement-in-Construction-World Business-Experts http://www.family-business-experts.com/risk-monitoring.html

Transparency International

http://www.transparency.org

The Independent Commission Against Corruption (ICAC) News South Wales http://www.icac.nsw.gov.au