Stakeholder Engagement Stakeholder Engagement
27 December

Engaging Stakeholders To Manage Risk

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Does undertaking efforts to manage risk really make a difference? There are times I wonder whether it does. I recently conducted a project review for a construction project that was stalled due to the collapse of a portion of the roof structure. I requested for the risk register and was provided with one that was very comprehensively documented and yet this risk of the roof collapsing was not included.

After making a number of enquiries, I realized that the project team that developed the risk register did so based on their perspectives of the project and on assumptions they made. They assumed that the roof structure would hold as it passed all structural tests but did not realize that the design of the roof structural elements could lead to sudden roof collapse under certain weather conditions. This was something the roof design team was aware of but was not consulted when the risk register was drawn up.

I realised then that that is where the problem was. Their visibility of the project was  bounded within the confines of their combined experience, assumptions. They did not reach out to the roof design team, who were stakeholders in this project, who could have pointed them in the right direction. This was where their risk management efforts failed.

The more I thought about how they could have been better positioned to identify this risk, the more I realised that by incorporating views of relevant stakeholders, the project team will be able to acquire a multidimensional perspective of the risks that surround a project from every possible angle. This would have enabled them to identify all risks.

By engaging with key stakeholders, such as the roof design team, assumptions made by the project team may be validated. This will prevent the possibility of relying on assumptions that do not hold when the project takes off. By incorporating the perspectives of relevant stakeholders on risks faced by a project when developing a risk response strategy, a deeper understanding of the risks involved and a better formulated risk response strategy emerges.

A practical starting point would be to ask the following questions that relate to any new project:

  • What is that we don’t know?
  • Who are the stakeholders that really matter?
  • What are risks they see from their standpoint?
  • How can we incorporate these risks into our risk response strategy?

The learning point that emerged from this is that it is important when undertaking projects to engage with key stakeholders to establish different risk scenarios from the perspective of all relevant stakeholders. The level of engagement can vary anywhere from collecting information from stakeholders, informing stakeholders of the risks, involving them in developing risk profiles, to even consulting with them on what to do to deal with the risks identified. The decision on the extent of engagement will depend on the extent to which the stakeholders have involvement, interest as well as influence on the project.

Interactive discussions with key stakeholders curtails the possibility that the outcome of these strategies could affect them negatively in the long run. Jointly agreeing on risk response strategies brings about better ownership of the outcomes by both the project team and the key stakeholders alike.

Engaging stakeholders also help in determining the severity of risks, the likelihood of these risks, and their impact level. This in turn will enable a more accurate assessment of the risk to emerge as opposed to when done purely by the project team.

What really matters is that, when risk strategies are formulated, they are realistic, accurately describe what pitfalls lie ahead, and more importantly, establish the readiness of all stakeholders in dealing with risks. When this is done, the process of developing a risk response strategy is less tedious, less time consuming and more effective.

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Dr Rumesh Kumar

Dr Rumesh Kumar is a certified project management professional, a certified professional trainer and performance improvement consultant specializing in the areas of leadership development, continual productivity improvement and enhancement of interpersonal skills.

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