2 Working with stakeholders

Effective risk management is about delivering reliable, timely and useful information that helps improve decisions. A prerequisite is therefore to understand who the decision makers are and what information they need.

The board is one group that plays an important role in setting the tone for how risk is managed but other stakeholders may play an equally important role and this will to a large extent depend on the business in question. The tone for risk may be set by regulators, such as the US Food and Drug Administration (FDA) in pharmaceuticals, the Federal Reserve (the US central bank), the UK Financial Conduct Authority (FCA) or European Central Bank (ECB) for banks, or by governments, non-governmental organisations (NGOs) or simply by industry norm.

A stakeholder map is a useful tool that can be applied to identify stakeholders and understand the most appropriate way to engage with them. This is typically done using a two-by-two matrix with ‘Influence’ on one axis and ‘Power’ on the other, both ranging from ‘high’ to ‘low’. These are sometimes undertaken alongside a communication strategy known as a ‘RACI’ (responsible, accountable, consulted and informed) and with richer forms of communication (such as one-to-one and face-to-face) used with groups who have ‘high’ Power and Influence, whilst more generic forms of communication (such as newsletters or web pages) used with groups with lower levels of Power and Influence.