Adi Prasetijo, compile from some sources
Social risk assessment is part of risk management in way to understand the risk that comes out from social environmental. Social risks arise from the dissatisfaction and grievances of external community and stakeholders that arise the conflict. The different perception and culture to understand each party in some points arise the conflict between them. Failure to manage these issues can have enormous economic costs, significantly damage the reputations of organisations involved and even put entire investments at risk.
Social risk based on Beth Kytle & John Gerard Ruggie (2005) is analogues to other risks that companies face, expressing a company’s perception of an external factor of stakeholder and an undesirable outcome. In the presence of social risk, companies have a large degree of discretion to establish appropriate based on a company’s risk appetite. Social risk will be defined in to 3 proponent items; Threat, and vulnerabilities. Threat is come out from combination between issue and stakeholder, and vulnerability moreover is the weakness portrait of the company in term of possible policies, procedure, program, and approach.
Social Risk = [Threat (Stakeholder + Issue)] X [Vulnerability]
According draft of ISO 31000 (2007) social risk assessment is actually part of risk management to predict and maintain social risk before and during implementation of operation. Risk assessment consist 3 sequel steps; Risk Identification, Risk Analysis, and Risk Evaluation. Risk identification seeks to identify the social risk that is relevant to the objectives of the company and the context of current and future situation. The aim of the risk identification is to generate a comprehensive list of risks based on those events and circumstances that might emerge the conflict. Risk analysis is about developing an understanding of the risk. Risk analysis provides an input to risk evaluation and to decisions on whether risks need to be treated and the most appropriate risk treatment strategies. And Risk evaluation is to assist in making decisions, based on the outcomes of risk analysis, about which risks need treatment and treatment priorities.
Inside social risk is characterized by four components that we want to took in combination; an dominant issue, a stakeholder or group stakeholders, a negative perception about the company, and the means to do damage or conflict (Tamara Bekefi, Beth Jenkins, & Beth Kytle,2006).
Social risk assessment will utilize integrative method that integrate dual social method both quantitative and qualitative methods in purposing based. Quantitative methods include perception survey, media analysis, and so on. Qualitative methods include in-depth interview to gain information to the resources person regarding perception of the stakeholder.
Project deliverables will include social risk potencies, social risk analysis, and risk mitigation within risk management planning. Deliverables of these analysis and mitigation plan could be two which one would be a report and second would be an interactive database of Social Risk.
- Committee Draft of ISO 31000 “Risk Management – Guidelines on principles and implementation of risk management”, Secretariat of ISO TMB WG on Risk Management, 2007
- Social Risk as Strategic Risk: A Working Paper of the Corporate Social Responsibility Initiative, Tamara Bekefi, Beth Jenkins, & Beth Kytle, John F. Kennedy School of Government, Harvard University,2006
- Corporate Social Responsibility as Risk Management, A Model for Multinationals, A Working paper no. 10 of the corporate social responsibility initiative, Beth Kytle & John Gerard Ruggie, John F. Kennedy School of Government, Harvard University,2005