Political Instability, Price Shocks, and Management Failures: A Validated Expert Risk Assessment Framework for Pakistani Construction Materials Firms

Abstract

Risk assessment remains a persistent challenge for industrial enterprises in developing economies, where information asymmetry, lack of standardised methodologies, and shortage of skilled risk managers hinder effective decision‑making. This study adapts and enhances the expert evaluation method originally proposed by Kambarov & Salman (2026) to Pakistan’s construction materials industry. A panel of 20 senior experts from PSX‑listed cement, steel, and building‑materials firms provided risk scores across 12 external and 10 internal risk factors. Using variance, coefficient of variation (CV), Kendall’s W, and Cronbach’s alpha, we assess expert consensus and classify enterprises into four risk zones (catastrophic, dangerous, permissible, gain). Results show that political & institutional risks (mean = 81.5), price index changes (82.1), and risk of management decisions (72.9) are perceived as most severe, while information security (external CV = 0.352, internal CV = 0.351) and environmental risks (CV = 0.338) exhibit the lowest consensus. A novel conceptual model – derived from the expert data and validated through partial least squares structural equation modelling (PLS‑SEM) – demonstrates that internal risk factors have a stronger direct effect on overall risk exposure (β = 0.53) than external factors (β = 0.42), with acceptable model fit (SRMR = 0.072, NFI = 0.91, GoF = 0.58). The proposed rating system, accompanied by six diagnostic visualisations, offers a practical, empirically grounded tool for risk mitigation strategy in Pakistan’s construction sector. We conclude with actionable recommendations for firms, industry associations, and policymakers, and provide full R code for replication.