Understanding stakeholder’s attitudes towards risk is key to managing project risks

by Sylvie Edwards
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Risk-like beauty is very much in the eye of the beholder. For every stakeholder taking part in your project or being asked to contribute in some way, each will come with his/her own attitudes towards risk and, therefore, of the project itself. As Project Managers, it is up to us and to our team to qualify and quantify the impact of these different and sometimes truly conflicting views of the work at hand.

Over the years of working in risk management as well as teaching the subject to individuals, I have concluded that clearly identifying stakeholders’ attitudes towards risk is a large part of the work it takes to be successful at this. It is also some of the hardest.

I jokingly tell students or team members all the time that the reason why this is such a difficult aspect of risk management to deal with is that most people don’t wear their views of risk on their forehead. Imagine if someone would walk into a room and you could clearly see that this person was risk-averse, neutral, or prone? That would certainly simplify our work. Quite often, the only known ways to get a sense of a person’s tolerance to risk is from their tone or their specific use of words or a turn of phrase they use to convey their opinions. This emphasizes the importance of really paying attention when people tell you their perspective.

Before going any further, it is important to understand that one individual might display signs of one risk attitude for one risk while being totally of an opposite view for other risks. Not everyone is consistently gravitating toward the one attitude all the time. These attitudes develop over time, building of experience, and are often guided by basic morals and biases an individual has developed. Research shows that a lot of these views of risk are developed over one’s teenage years, which tend to be riskier for most individuals. If it seems that people will fluctuate from one attitude to another at times without any clear reason, which you often cannot see.

Another key factor is that these perspectives are common not only to individuals but also to organizations, groups, teams, communities, and even societies. 

There are mainly 3 attitudes towards risk which are commonly referred to and used to classify or qualify risk perspectives. Let’s review them:

  1. Risk-averse (adverse): If you’re risk-averse, it generally means you don’t like to take risks, or you’re comfortable taking only small risks. Individuals in this group will go out of their way to avoid risky situations. A project with a lot of stakeholders with this perspective will demand a lot of reassurance, explanations and it will be more work for the PM and the team to manage risks as there will tend to be more risk (real or perceived) than anticipated.
  2. Risk neutral: A person with a risk-neutral approach simply doesn’t focus on the risk elements of a project – regardless of whether or not that is an ill-advised thing to do. Often these individuals do not have little stake in the situation and will prefer to let things happen or differ in decisions to others. A project composed of individuals mostly in this group will often be paralyzed for a lack of decisiveness.
  3. Risk prone (seeking): A risk-seeker or risk-lover is a person who prefers risk. Risk for these individuals is like fuel or a drug in certain cases. They thrive on being able to beat the odds and will often take on risks without a second thought. A lot of these individuals on a project will make it a fun ride… They will not necessarily be looking at the outcomes but more at how bumpy the ride can be.

Engaging our stakeholders early in conversations about potential risks to the project will help us not only in gaining insight into the stakeholders’ objectives but also assist with a better understanding of their position towards risk, which ultimately can only facilitate our decision-making process. We need to ensure that the entire risk management practices and the process is transparent and inclusive for every one of our stakeholders to provide the whole picture.

It is also never too late to change a person’s perspective, although it can be quite the task. Success will often provide a means to show a different perspective here. This is only accomplished by being vigilant and keeping on top of our risk management efforts. It remains crucial until the very end of our project to determine where we stand or if our risks are evolving.

I wish I could have given you some more concrete advice or a clear test or tool to use to get a better reading of risk attitudes from your stakeholders, but the only thing that will work for you is to develop great listening skills and to believe them when they DO tell you (although not in some many words or directly) where they stand. They might be misinformed, so it will be up to you and your team to guide them.

 

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