Social Risks & Opportunities
Social risk managementThe importance of managing social risk is increasingly recognised by the proponents and financiers of large projects. Social risks arise primarily from the dissatisfaction and grievances of community and non-governmental stakeholders. Experience shows that failure to manage these issues can have enormous economic costs, damage the reputations of organisations involved and put entire investments in jeopardy. Community stakeholders, however, should not just be seen as a potential source of negative risk. Establishing good relationships with local stakeholders and focusing on their needs and concerns can generate significant positive opportunities for both projects and communities.
EAP has published a briefing note presenting practical guidance for project managers on taking a systematic approach to managing social risk and opportunity on oil, gas and mining projects and large infrastructure developments. The core objective of the approach presented by EAP is to generate broad-based community support for the project based on free, prior and informed consent. This is achieved through early and effective engagement with community stakeholders and by pursuing an approach to design that addresses social and environmental issues and stakeholder concerns early in the project life cycle. By adopting this proactive strategy, project proponents can maintain greater control over the project development process and seek positive outcomes for both the community and the project.
The briefing note summarises the lessons from EAP’s extractive industries and public infrastructure programmes, including collaborative research with the Overseas Development Institute (ODI), International Alert and the Actuarial Profession/Institution of Civil Engineers Joint Working Party on Project Risk Appraisal. It also draws on the innovative partnership between EAP and Balfour Beatty looking at how a businesses internal risk and opportunity systems can be used to enhance the social performance of the projects.
This briefing note was developed in partnership with the Actuarial Profession/Institution of Civil Engineers Joint Working Party on Project Risk Appraisal. Part One presents an overview of the issue of social risk drawing on the concept of social licence to operate. It also examines some of the limitations of common approaches to building social licence to operate. Part Two presents an overview of two inter-related strategies that are central to effective social risk management. Part Three provides guidance on how social risk and opportunity can be integrated into the overall project risk analysis and management framework.
This report examined the opportunities to use risk and opportunities identification and analysis as a tool for enhancing social performance in the engineering services sector. The report was written in partnership with ODI with the assistance of Balfour Beatty. The report looked in detailed at Balfour Beatty’s Opportunities and Risk Management Framework and used the lessons from a review of the company’s Lot 3 Power Transmission Line Project in Indonesia. The report makes generic recommendations about how companies can modify their systems to enhance the social performance outcomes of their projects and activities.