As a project manager specialized in corporate social responsibility (CSR) in the mining industry, I sometimes hear people compare stakeholder management to risk management. They are partly right: the two activities have a lot in common and it is quite interesting to compare them to better understand what the stakeholder management is and what is not.
In risk management, risk identification must be rigorously and systematically done. Otherwise, unexpected problems could arise and would require the manager to deal with it urgently. The consequences could be harmful to the company.
In stakeholder management, risk is represented by all persons or groups of persons with an interest in the project or those who are affected by it. Their interests and concerns are somehow risk factors, as they may affect the evolution of the project (e.g. protest against the proposed dam, petition, etc.). Meeting the expectations of stakeholders therefore reduces the risk and mitigates the potentially negative influence on the project. In other words, the stakeholder management can limit the risks to stakeholders.
Let’s compare the two procedures:
- Identify the risks
- Understand the risks and analyze, quantify and prioritize it
- Develop a plan to minimize the negative consequences on the project
- Identify who is concerned about the project
- Understand what motivates the stakeholders and what are their concerns
- Develop a plan to maximize the satisfaction of stakeholders in the project.
The stakeholder management also follows the steps associated with risk management.
Step 1: Identify the risks
We can’t manage stakeholders without knowing them. It is therefore necessary to identify them by asking the question: “who cares about my project? ». Some stakeholders are easy to identify (customers, suppliers, employees, local community), but others are a little less easy (adversaries lawyers, etc.). We must identify both threats and opportunities.
Step 2: Analyze and measure risks
In risk management, it is recommended to prioritize risks based on their probability and impact. It is possible to prioritize the stakeholders involved, according to their interest and their impact on the project. Interest in the meaning of “How do they care about my project? ” and impact in the sense of” What is their ability to affect the project? “. Clearly, it is more difficult to quantify- stakeholders as project risks, but it is possible to organize some key information: what is the concern? How the project affects them? How the project motivates them? What do you need from them to make the project progress?
Step 3: Minimize the risk
How to leverage your supporters and minimize the negative impact of your opponents? The more we know about our stakeholders, the easier it is to work with them. Conversely, if you ignore them, it deprives you of their support and their dissatisfaction increases towards the project. It is therefore beneficial to properly plan. With the development of information technology, we now have powerful tools to inform stakeholders. Who needs information? What information? How many times? In which format they need it? All these questions should be the basis of your communication plan.
Benefits for managers
The main benefit of stakeholder management is to enable the project to proceed without problems. The manager is able to identify, analyze and control the risk associated with the stakeholders.
The other benefit is the identification of interesting opportunities for the project. Rigorous and proactive management of the stakeholders involved is a good tool to convert potential threats into opportunities for the project. Therefore, stakeholder management goes beyond the simple risk management. With a little discipline it is now possible to prevent problems before they happen. The important thing is to be proactive and to build sustainable relationships with the stakeholders.
More from this category
- How Should You Handle Change Management When Implementing New Business Software?
- Stakeholder Management Software: It’s Time to Change
- Stakeholder Engagement Software to Assist Land Acquisition and Resettlement
- 4 Success Factors to Choose Stakeholder Management Software
- 5 Reasons Why CRM Is Doomed to Fail at Stakeholder Engagement