Investigating disruptive extortion risk in the South African construction sector

Abstract

Similar to other countries globally the construction sector is considered one of the sectors that contribute to the country’s economic growth and employment opportunities. However, due to its dynamic nature with complicated stakeholders, it faces numerous risks that are sometimes disruptive. With the changing environment and socioeconomic challenges that most countries have to deal with, especially developing nations like South Africa, organisations face a new risk involving the local community stakeholders. Most organisations lack strategies or project teams do not know how to engage the local community on the risks posed to projects as an external stakeholder. In South Africa, the disruptive extortion risk by the criminal gangs invading construction sites under the guide of ‘transformation’ impacts the local community, the construction sector, and the South African economy. How the construction sector assesses and manages this risk is not fully understood. Hence this research investigated how the construction sector in South Africa assesses and manages the disruptive extortion risk brought about by these criminal extortion groups. To enhance understanding of the assessment and management of disruptive extortion risk, this study employed an inductive qualitative approach to explore the procedures followed by the different stakeholders. In-depth semi-structured interviews with representatives of the various stakeholder groups in the construction sector, from both the public and commercial sectors in South Africa, were used to gather data from fourteen participants. The research found that the local community engagements are faced with various challenges triggered by numerous factors which provide an entry point into the projects for the extortionists. The findings revealed that the disruptive extortion risk is criminality and therefore cannot be assessed by the construction sector stakeholders and requires all stakeholders, and government intervention with law enforcement to manage. The research also revealed that the disruptive extortion risk impacts local communities, the construction sector, and the South African economy, causing considerable damage. Most importantly, the findings revealed that for the disruptive extortion risk to be effectively managed, effective stakeholder management is required. The study concluded that risk-stakeholder integration for the management of certain risks is necessary for the achievement of strategic objectives in organisations.