Before attempting to deal with stakeholder risk management, it is necessary to understand who the stakeholders are and what is meant by risk perceptions.
Knowing Who They Are
Project or company stakeholders may be individuals, a group of people, or an organization that can be affected by the action plan. For instance, a new business venture requires resources such as funds, equipment, trading stocks, infrastructure, technical support, effective business plan, and initial operational expenses. Funds for meeting these requirements are obtained by attracting stakeholders. Stakeholders include lending institutions, banks, bondholders, project sponsors, partners, investors, and venture capital firms.
Project stakeholders are more like project sponsors who do not have any internal project commitments, but they do affect the project externally. They have an interest in furthering the project and they expect to benefit upon successful completion of the project. A project stakeholder is anyone who has an interest in the project. Project stakeholders have a huge impact on the overall performance of a particular project. from its inception to the end level of project execution. Their interests may completely affect the whole system of project management and can lead to improper project execution or delayed project completion. Examples of project stakeholders may also include the customer, the project manager, the project team, and the project testers.
The project or organization must identify the stakeholders, determine their requirements and expectations, and identify and evaluate the levels of risks of each one of them and successfully manage the risk factors. A stakeholder risk analysis is essential so that each stakeholder – be it an individual or organization – is aware of the risk perception. Stakeholder risk analysis means identifying the stakeholders, types of risks, extent of risks, levels of stakeholder commitment, and degree of influence.
Effective risk management involves prioritization and thorough analysis of the risk factors based on probabilistic models which can be directly related to the extent of impact of the risk. Likewise, prioritizing stakeholders by authority and degrees of involvement and levels of risk threats are necessary.This analysis will provide valuable input to a risk mitigation plan so that more resources and attention are paid to the stakeholders who pose or face the greatest risk to the project.
A Risk Response Strategy
Rapid advancements in communication technology are opening up new ways to promptly provide the stakeholders with all pertinent information and relevant data. But these advanced facilities can be put to meaningful use only if one is clear which stakeholder needs what information and in what style. One also needs to take care how often the information needs to be shared with stakeholders. These and other ingredients are critically important to devise the right communication plan.
Good professional relationships with the stakeholders and regularly interacting with them are crucial for project completion.Organizing regular meetings with stakeholders, accompanied by documentation, will help boost the confidence levels of shareholders. Lack of regular communication with stakeholders will instill in their minds needless apprehensions and unfounded fears. Make sure to obtain the names and and contact information of all the stakeholders.
Successful Stakeholder Risk Management
Risk mitigation and risk prevention are the top stakeholder risk management priorities. The success of risk management lies in the fact that all risk perceptions are fully visualized and proactive risk management measures are put in place. It is necessary to evaluate all types of risks and find solutions to preempt the threats before the risk occurs. The more one knows about the stakeholders and their levels of importance, the more effective and purposeful the risk management strategy will be.