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: Risk management
- 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
Step 2: Analyze and measure risks
Step 3: Minimize the risk
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.