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Optimize Project Performance using Risk-Based Stakeholder Analysis

stakeholder analysisMost project managers understand that stakeholders possess and exercise various forms of power in the context of a project. The position adopted by stakeholders is likely to have a significant effect on whether or not a project succeeds, and stakeholders are an important source of risk who should be identified, analyzed, and managed proactively by the project manager and team. As with all risks, there are both positive and negative stakeholders, and project managers need to identify which stakeholders offer opportunities, and where potential threats might lie – and to then act appropriately.

Risk-based stakeholder analysis can help us find risky stakeholders. Most people use two-dimensional stakeholder analysis models that consider power/interest or power/influence. Risk-based stakeholder analysis uses three dimensions, which reveal important risk characteristics:

These three dimensions help us to divide stakeholders into eight categories that are divided into two groups based on Attitude:

Advocates, Friends, Sleeping Giants, and Acquaintances are the four stakeholder types with a positive attitude toward the project. They are potential sources of opportunity.

Saboteurs, Challengers, Opponents, and Hindrances are the four stakeholder types with a negative attitude. They are potential sources of threat.

As with any other risk, the level of risk posed by stakeholders can be assessed in two dimensions: the probability that a particular stakeholder might affect the project, and the potential size of impact. Probability is indicated by the strength of their Interest, and impact is driven by their level of Power. These variables are shown in the graphic at the bottom of the article, along with the third variable, Attitude.

Risk-based stakeholder analysis also suggests appropriate risk response strategies for each of the eight categories:

Before project managers can undertake a risk-based stakeholder analysis, they must first know their stakeholders. It’s important for project managers to invest time and effort in identifying and understanding the stakeholders.

Once we understand which stakeholders pose a threat and which offer opportunities, it is important for us to seek to influence them to minimize threats and maximize opportunities. Project managers don’t usually have formal authority over their stakeholders, so we need to influence them in other ways.  Two particular aspects are helpful here:

Project managers should remember that stakeholders change over time, so it’s important to review the stakeholder analysis regularly. And finally, project managers must pair analysis with action. Understanding the risks posed by stakeholders must lead to appropriate response action, otherwise it’s a waste of time.

This process of risk-based stakeholder analysis should be a fundamental part of a project manager’s strategy. We can seek to avoid harmful effects arising from the most negative stakeholders, or protect our business or project from their involvement. We can also take advantage of the support available from positive stakeholders, engaging their help wherever possible to assist us in achieving our goals. Many stakeholders are risky, but if we identify them and act appropriately, we can maximize our chances of success.

Adapted from Hillson, D. A., & Simon, P. W. (2012). Practical project risk management: The ATOM Methodology (second edition) [1]

For further details on how to implement risk-based stakeholder analysis, see the paper “My stakeholders are my biggest risk” by David Hillson, available online for free download from  http://risk-doctor.com/docs/NA16EXC16%20My%20stakeholders%20are%20my%20biggest%20risk%20-%20paper.pdf [2].