Assessing risk in engineering, work and life

# Example 7 Identifying stakeholders

Make a list of stakeholders who might be relevant to an organisation managing a risk that involves the environment around a chemical processing plant facility located 20 km from an urban area.

Solution

Stakeholders could include:

- people who live and/or work in the urban area
- people who live and/or work close to the plant
- the local authorities (district and county level)
- local emergency services
- employees of the company
- customers and suppliers of raw materials and other resources
- community groups
- representatives of different cultural, economic or ethnic groups
- public health agencies
- businesses in the area
- trade unions representing employee groups
- environmental pressure groups
- consumer rights organisations
- religious groups
- educational and research institutions
- regulatory agencies
- trade associations
- those with a financial interest – bankers, investors, insurers, etc. and possibly the national government or assembly.

## Activity 10 Considering stakeholders

Allow approximately 15 minutes.

A small company, Automotive Widgets Ltd, makes specialist parts for cars that are shipped out to a major car manufacturer. The company is sited on a local industrial estate, surrounded by other small companies and nearby housing. Around 240 local people work for Automotive Widgets, and local suppliers provide the company with raw materials, components for its widgets and office supplies.

Consider who the stakeholders of Automotive Widgets might be. Include at least four internal and four external stakeholders, aiming for a total of at least ten.

## Answer

Internal stakeholders would include:

- the owners
- shareholders
- staff
- contractors.

External stakeholders could be:

- banks/financiers
- insurers
- customers
- regulators
- local community groups
- other companies based on the industrial estate
- utility companies
- material and component suppliers
- office equipment suppliers.

All the individual groups of stakeholders in the example and activity above will have many ways of evaluating the same risk, and may arrive at quite different opinions. Of course, they may also be different groups arriving at the same conclusions. The following factors will usually influence the perceptions of different stakeholders.

- How imminently might the effects be experienced? In other words, are the effects likely to appear in the near future, later on in life, or will they have an impact on future generations?
- How urgent is the need for action? For example, a road tanker carrying flammable solvent that overturns in a residential neighbourhood requires a risk assessment with actions requiring immediate attention; a municipal waste incinerator operating normally in the same area can be assessed bearing longer-term impacts in mind.
- Do different stakeholders have different perceptions and concerns? For example, parents of children at risk from exposure to an industrial pollutant may feel quite differently about a hazard than workers whose income depends on the industry causing the problem. When these are the same people – that is, the parents are also the workers – perceptions of the hazard can be quite complex.

Experience increasingly shows that risk management decisions made in collaboration with stakeholders are more effective and more durable than those that exclude stakeholders from the process. Stakeholders can make a unique contribution to the decision by providing important information, knowledge, expertise and insights for developing workable solutions. They are more likely to accept and implement a risk management decision in which they have some participation. Communicating clear and consistent information to all internal and external stakeholders is essential to building trust.

You can therefore see how risk management involves a multitude of stakeholders. You have also previously seen how human error can have a significant impact on risk. Over time, risk management techniques have evolved to encompass human interaction with engineering systems – that is, to combine predictable, quantifiable, technical risks with the uncertain reactions of human operators or natural systems.

It is also clear that risk assessment and management are information intensive. Large volumes of technical information have to be gathered, processed, analysed and eventually communicated to a broad range of users under quite different conditions, ranging from planning and regulatory activities to incident management.

Finally, management systems may well be needed to assist with risk management. They offer tools for the systematic implementation of policy and strategy. Integrated management systems help to ensure that safety, quality, environmental and business risks are managed right across an organisation. They provide a foundation on which to build continual improvement.

OpenLearn - Assessing risk in engineering, work and life
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