Dynamic capabilities and risk management: Evaluating the CDRM model for clients

Book chapter, 2019

Purpose - The purpose of this paper is to examine the Company Dynamic Response Map (CDRM) risk management model that uses the dynamic capabilities concept. The study examines risks associated with strategic decision-making in construction projects and evaluates proposed methods that connect the dynamic capabilities of project-based organisations with risk management.

Design/Methodology/Approach - This preliminary study examines risks associated with strategic decision-making in construction projects and evaluates a proposed model that connects the dynamic capabilities of project-based organisations with risk management. Specifically, the CDRM model is evaluated, a risk management model developed by Arena et al. (2013) to better respond to risks and opportunities based on the concept of dynamic capabilities.

Findings - We argue that although the CDRM presents a promising development in that it uses dynamic capabilities prospectively in a risk management model to produce tangible results, there are, nonetheless, impediments to the CDRM being used by construction clients. The primary impediment relates to the issue of categorisation, the difficulty in assigning a specific identified risk to a particular category of dynamic capabilities.

Research Limitations/Implications - A conceptual argument is made and not an empirical one. Practical Implications - The CDRM model was developed to be used in practice and this paper evaluates that model.

Originality/Value - Contributes to both the dynamic capabilities literature as well as risk management literature. The paper ends with a discussion on the possible merits of the CDRM, and an evaluation on potential impediments to its use by construction clients.