Michael Felber, Partner
Large transformation projects, such as those we often encounter in the energy, industrial and real estate sectors, often face resistance from stakeholders. This can lead to unpredictable delays, sensitive cost overruns and even the failure of strategically important projects.
The importance of risk in stakeholder management
By proactively addressing stakeholder concerns, companies can secure what is known as social license, or social acceptance and support, for their projects. In this article, we would like to provide you with a rough guide to our approach to stakeholder risk management in order to manage stakeholder-generated uncertainty.
"Stakeholder risk management is not only an indispensable part of a successful ESG strategy, but also plays a crucial role in ESG reporting. By transparently reporting on their stakeholder engagement initiatives and how they are managing risk, companies demonstrate their commitment to sustainability, social responsibility and governance."
Michael Felber, Partner, int/ext
Stakeholder Risk Management: In 6 Schritten zum Ziel
Effective stakeholder risk management requires a systematic approach. The following six steps, which should be executed in a continuous loop, provide a helpful framework for reducing complexity in stakeholder risk management:
1. Identify risks
Begin by uncovering potential threats and obstacles related to stakeholders. These may include specific conflicts of interest and use, relevant social developments, emotional factors, or regulatory trends. Early identification of risks enables better preparation and implementation of mitigation strategies. A streamlined approach might involve brainstorming with your team to identify risks, while a more comprehensive approach might involve conducting a full risk assessment involving outside sources and consultants.
2. Map stakeholders
Next, create a detailed map of the stakeholder landscape by identifying their locations, interests, and areas of influence. This important information will help you determine the best approach to address the various stakeholder concerns and expectations. A simple stakeholder mapping could consist of listing the key stakeholders and their interests or their attitudes, while a more comprehensive mapping could involve using dedicated stakeholder engagement software or hiring experts to conduct an in-depth stakeholder analysis.
3. Plan strategy
Based on a clear understanding of the stakeholder landscape, you should develop a tailored stakeholder risk management strategy that addresses the unique challenges and concerns in the context of your project. This often starts with fostering collaboration between internal departments to improve the sharing of key data and insights. Investing in improving complaint management is also an option. Also, carefully consider when and how you inform stakeholders about potential risks.
Effective risk communication demonstrates accountability, sets realistic expectations, and ensures everyone is on the same page. Remember, however, that risk communication is a specialized field that often requires expert knowledge to be effective. When planning your strategy, weigh the benefits of leaner approaches versus more comprehensive, proactive measures to find the right balance for your operation's needs and resources.
4. Engage stakeholders
Establish meaningful interaction with stakeholders through open dialogue and consultations. Demonstrate a genuine willingness to understand concerns, build trust, and find mutually beneficial solutions. A very simple tactic for engagement might be to respond promptly to stakeholder inquiries, while a more comprehensive and proactive approach would include citizen meetings, workshops, or monitoring or participation groups.
5. Measure progress
Continually monitor the effectiveness of your stakeholder engagement efforts. Evaluate the success of your strategies and identify areas for improvement. A low-cost approach might be to solicit informal feedback from stakeholders. A more costly method, but one that is more meaningful for CSR or ESG reporting, could involve conducting regular stakeholder satisfaction surveys or hiring external auditors to assess the effectiveness of your engagement strategies.
6. Adjust your strategy
Adapt your stakeholder engagement strategy to changing circumstances, such as changing stakeholder opinions or changing project dynamics. Stay agile and responsive to ensure your project stays on track. A simple way to adapt your strategy might be to hold regular team meetings to discuss stakeholder feedback and make necessary changes. A more advanced approach might be to implement a continuous improvement process that integrates stakeholder feedback and performance metrics into the decision-making process.
From stakeholder risk to social acceptance.
Managing stakeholder risk should be a key aspect of any potentially controversial project. With a well-structured approach and a multidisciplinary team, you can ensure that your project moves toward its goal with less uncertainty.
Our team of experienced professionals is happy to share their expertise and help executives with ambitious projects navigate unanswered questions in stakeholder risk management.
We'd love to talk with you about how we can support your project. Contact us - we look forward to hearing from you.