Risk Inflation Is Quietly Reshaping Major Projects — And Hardly Anyone Is Talking About It

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In capital-heavy industries—construction, infrastructure, engineering, energy, defence, transport, tech delivery—risk management has become the dominant language. Everything is now a “Risk”:

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• Delays are a “timeline risk.”
• Scope creep is a “delivery risk.”
• Misaligned stakeholders are a “governance risk.”
• Missing materials are a “supply-chain risk.”
• Even indecisive leadership is reframed as “strategic risk exposure.”

But the real story isn’t that people talk about risk. It’s why they talk about it, and how the meaning of “risk” has been diluted to the point of strategic distortion. Risk inflation is quite literally corrosive. And it’s starting to shape project outcomes more than design choices, commercial strategies, or contractor capability.

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1. Risk Inflation Emerged Because Projects Have Two Parallels

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Every major project now runs two simultaneous versions of itself:

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1. The Delivery Reality: What is actually happening on site, in supply chains, in design offices, in commercial negotiations.
2. The Governance Reality: The narrative version of the project that must fit within frameworks, dashboards, and executive updates.

Where delivery reality is messy, uncertain, and human…
Governance reality must be predictable, quantifiable, and defensible.

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Risk language becomes the insulation, reconciling the truth of project chaos with the organisational need for coherence. This is why project teams end up with 150-item risk registers but only 8 items on the critical path.

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2. Risks Now Function as Currency

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Risks have quietly become tokens used to negotiate power, budget, and influence. Teams use risks to:

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• Justify extra contingency
• Delay decision gates
• Inflate staffing levels
• Push responsibility upward
• Strengthen their bargaining position in commercial negotiations

A clever supplier can use risk inflation as leverage: This isn’t a delay; it’s an emerging risk we need to jointly mitigate. We recommend a commercial variation.

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Project managers do the same internally. Executives, ironically, reward this behaviour, because a risk that is documented is a risk that is defensible. In other words risks have become vocabulary for resource extract.

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3. Risk Registers Have Become Shadow Schedules

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An overlooked dynamic: The risk register increasingly functions as a parallel schedule, but one with no logic, float, sequence, or criticality.

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• It grows faster than the real schedule
• It contains events that are guaranteed, not probabilistic
• It hides work behind “mitigation actions”
• It blurs tasks, issues, and uncertainties into one bucket

In effect: The schedule shows what will happen; the risk register shows what people want to avoid being blamed for. This is why major projects end up with schedule slips that weren’t predicted, cost overruns that were on the risk register, endless contingency burn justified by emerging risks, and milestones that move even when risk scores stay stable. The register has swallowed the truth.

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4. Procurement Has Become the Front Line of Risk Inflation

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Procurement teams now face risk inflation in three directions:

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1. Supplier to Buyer: Suppliers frame gaps, unknowns, and commercial manoeuvres as “shared risk exposure.”‍
2. Buyer to Supplier: Buyers push incomplete scope or unrealistic timelines while calling it “risk transfer.”‍
3. Internal to Procurement: Executives pressure procurement to guarantee outcomes they do not control—forcing the use of risk language as a shield.

This leads to the most dangerous outcome: Risk becomes a rhetorical device used to justify poor contracts, not improve them. Procurement is blamed for risks it didn’t create, suppliers monetise risks they can exaggerate, and delivery suffers.

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5. The Hidden Cost: Risk Inflation Is Crowding Out Judgment

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This is the non-obvious part almost no one writes about:

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Because modern frameworks require quantified risks, not reasoned judgment, project teams increasingly surface what is measurable and suppress what is meaningful. The things that kill projects: leadership misalignment, delayed decisions, unclear responsibility, slow governance, bad culture don’t fit comfortably into a risk score.

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So they become invisible. Meanwhile, trivialities like “forklift breakdown” get RAG-rated and managed rigorously because they fit the framework. Risk inflation industrialises the trivial and masks the catastrophic. When everything is a risk, the project and the team stops seeing actual risk.

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Turning the Lens Back: Why This Matters for Project and Capital-Intensive Industries

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Risk inflation explains why so many projects:

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• feel over-governed yet under-controlled
• are “green” until the day they’re catastrophically not
• burn contingency faster than progress
• have teams who are busy but not aligned
• drown in documentation yet lack clarity

It also explains why delivery often feels stuck:

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• Too many frameworks, not enough thinking
• Too much compliance, not enough judgment
• Too much reporting, not enough conversation

This is the silent tax on every major project. Our set of solutions:

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1. Split the register into three separate lists: certainties that should migrate to the schedule, issues that require assigned owners and deadlines, and risks that represent only real uncertainties. You shrink risk by about forty percent immediately.
2. Stop measuring likelihood and start measuring decision latency, since most project failures come from slow decisions rather than unlikely events.
3. Introduce a reality update alongside risk dashboards by adding a section that answers the question: what is actually happening that the RAG report cannot express?
4. Penalise excessive risk creation without mitigation, because a risk with no owner or action is noise rather than insight.
5. Encourage risk sunsetting, where risks expire unless renewed with evidence.

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Let's Wrap Up: Risk inflation isn’t a process failure. It’s a cultural adaptation to the growing gap between the complexity we manage and the certainty we pretend to offer. Until we recognise that the risk language has become overloaded, we’ll keep building governance comfort while starving delivery of clarity.