As I frequently interact with PMP aspirants, I bring this point on the similarities between Stakeholder Management and Risk Management. Few PMPs have written their PMP Success Stories (usually less than 5% write), and they know these differences. Some even have noted the importance of these two knowledge areas:
- Stakeholder Management, and
- Risk Management.
Do note that, in my classes and courses, I've called Stakeholder Management and Communication Management as the Twins. See here for a detailed understanding. I've also said Resource Management is the close Sibling of the Stakeholder Management. Learn more here.
Such terms are mine and I've used it while explaining various such areas for your PMP exam. See here.
In this post, I'm saying that both Stakeholder and Risk Management have a shared language in the Art of Project Management. Like the twins and siblings before, you’d be hearing it for the first time!
Indeed, the language understanding and similarities in both these management areas is unique. As a management practitioner, you need to know them. So, let's see them one by one.
Note: If you are preparing for the Portfolio Management Professional (PfMP) exam, it's good to know the below ones. Stakeholder management will be part of Communication Management knowledge area for your PfMP exam. See here.
1. Identification of Stakeholders and Risks
Stakeholders are identified, so are Risks. Stakeholder identification happens from the very beginning of the project. In fact, the Project Charter (see here) has the initial list of stakeholders and based on it a detailed stakeholder list is prepared.
Risk identification also happens from the very beginning of the project. Like stakeholders, the project charter has high-level information on project risks.
2. Iterative and Integrative Processes
Many think that after a complete identification and assessment has been done, then the process is no longer used. In reality, both stakeholders and risks change throughout the life cycle of the project.
Stakeholder identification is continuous in nature and it's an iterative process. As and when new stakeholders are identified, they have to be assessed, analyzed and engaged. Risk identification too is a continuous process and is iterative in nature.
3. Outputs of Stakeholder and Risk Identification
Stakeholder Register is the key output of the stakeholder identification process. In the real-world, it can be a document or a spreadsheet. It'll have identification, assessment information and stakeholder classification such as being internal or external.
Similarly, Risk Register is the main output of the risk identification process. Again, in the real-world, it's usually a spreadsheet with various risk attributes including the risk id, name, description, probability, impact and risk score. A simple risk register shown below.
You can learn more here.
4. Outcomes of Stakeholder and Risk Identification
Do note that, I've mentioned outcomes, not outputs. Output is about the end result. Outcome, on the other hand, is about what you actually want to do/have with that end result.
For example, buying a vehicle is an output of the buying process. But using that vehicle to save time or function more efficiently is the outcome. So, how about the outcomes in Stakeholder and Risk Management?
The stakeholder register is the output. Better stakeholder engagement and stakeholder satisfactions are the outcomes. Similarly, the risk register is the output. On the other hand, credible risk management and optimization of risk responses can be the outcomes.
5. Minimization of Negative Impacts
Here, I'm referring to the minimization of potential negative impacts.
Stakeholders can be an individual, a group, a community, or even an organization that may affect, be affected by, or perceive to be affected by a project. In other words, they can impact or affect in a positive or negative way. It's the job of the project manager to minimize the negative impact.
Similarly, the definition of risk (see here) clearly states that a risk can have positive or negative impact on the objectives of the project. Again, it's the job of the project manager to minimize the negative impact of a negative risk (or threat). This is shown below.
6. Maximization of Positive Impacts
This is the reverse of the previous point. I'm referring to the maximization of potential positive impacts.
Risks can be opportunities as well. Opportunities lead to benefits. In risk management, we try to maximize the positive impact of the opportunities, i.e., we try to increase the probability and/or the impact of the risk. For this purpose, risk responses are employed. See here.
Similarly, in stakeholder engagement, the focus is to effectively engage stakeholders- especially with high power and interest or influence. This can increase the chance of project success and subsequent outcomes/benefits.
For example, for the below figure, I've taken two attributes - influence and impact. We want to have the stakeholders to move into high influence (HInf) and high impact (HImp) zone.
7. Stakeholder Engagement Plan and Risk Management Plan
To manage stakeholders, we create the Stakeholder Engagement Plan (SEP). Similarly, to manage risks, we create the Risk Management Plan (RMP). Both these plans are subsidiary plans of the project management plan.
Both these plans are progressively elaborated and integrated into the consolidated project management plan.
8. Hidden Stakeholders and Hidden Risks
While stakeholder identification should be exhaustive and continuous, still it's possible that some can remain hidden. Sometimes, these hidden stakeholders, if not identified and engaged, can derail your project. You need to be very careful in such situations.
Similarly, some risks can remain hidden and may not be identified. There are many ways to identify such risks such as assumption analysis, risk analytics, among others.
9. Stakeholder Attributes and Risk Attributes
Stakeholder attributes such power, interest change. Risk attributes such as probability and impact also change. These are rarely static.
As they change, you’ve to adjust your plans and documents to reflect the changes. For example, a neutral stakeholder can become supportive or resistant over time. In such cases, the engagement strategy has to change.
Similarly, a risk with high probability and high impact can become low probability and medium impact over time. This results in reduction in risk score and the risk could move into the Watch-List.
10. Obsolete Risks and Dormant Stakeholders
Risks are not always active and primary ones. They can be:
- Obsolete
- Dormant
- Secondary
- Residual, among others.
When a risk becomes obsolete, they are no longer tracked and are usually marked as closed in the risk register. These can later become part of the organization's archives and can be revisited when needed.
Similarly, stakeholders are not always active and/or primary. As noted earlier, stakeholders' power, influence, interest etc. change over time during the project life cycle. Some stakeholders get passive or even dormant. You need not actively engage with these stakeholders.
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Want to know more? Consider being a subscriber to the PMP Live Lessons course.
With it, you'll learn more. Considering the similarities in the language, here are a few more:
- Stakeholders are prioritized, so are risks.
- Stakeholders are analyzed. Risk are also analyzed.
- Stakeholder engagement levels are monitored; risks are also monitored.
A number of PMPs have used this course to get certified. You can be a PMP too. More importantly, you'll know various areas of project management, which no one can or will be able to tell you.
References
[1] PMP Live Lessons – Guaranteed Pass or Your Full Money-Back, by Satya Narayan Dash
[2] PMP 35 Contact Hours Online Course, Full Money-Back Guarantee, by Satya Narayan Dash
[3] Book, I Want To Be A PMP – The plain and simple way, Second Edition, by Satya Narayan Dash
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