Social risk management is core to sustainable infrastructure delivery. Organisations will need to build this capability to support community resilience and wellbeing, meet climate adaptation challenges and deliver social value.
Social risks are the non-technical risks commonly associated with major infrastructure project selection, planning and delivery. They include a range of concerns about potential or actual harms or hazards that relate to individuals’ or communities’ livelihoods and result from social changes precipitated by major projects. Common examples of social risk factors include:
- Socio-environmental hazards
- Cultural heritage and First Nations People’s concerns
- Community identity
- Land acquisition and resettlement
- Land access
- Local amenity and liveability.
It is very common for organisations to use risk maturity models, risk appetite frameworks or risk management models, for everything from environmental to safety to financial concerns. The same level of systematisation and consistency is beginning to be applied to social considerations. Two important changes are supporting this move: First, governments and developers better understand the relationships between social and community concerns and their ability to deliver the infrastructure that communities need, on time and on budget. Secondly, our ability to identify, model and consistently assess social factors is improving.
I2S has created a Social Risk Maturity Model which helps organisations to understand the most common ways of approaching social risk and the key considerations and outcomes within each of those approaches. Like any risk maturity model, there is no prescribed optimal approach. All are valid and will be shaped by each organisation’s values, social risk management capabilities and organizational goals.
The approaches to social risk management defined in the I2S social risk model are:
- Business and reputational risk
- Social value maximisation and social licence to operate
- Social protection
- Integrated and future focused.
These four approaches reflect approaches to social risk that begin with a basic notion of social risk as business and reputational risk -acknowledging and working to prevent social externalities that can harm business viability. A social protection approach incorporates business aspects and adds concerns related to avoiding social harm and addressing community outrage. A social value and maximisation of social licence to operate goes further to enhance community wellbeing and deliver social benefits. Finally, the most evolved approach is integrated and future-focused, based on an understanding of social risk that aligns with current policy frameworks such as the UN Sustainable Development Goals (SDGs), environmental, social and governance (ESG) frameworks, climate mitigation and adaptation, and resilience-building.
I2S’ pilot study and the first six months of our ARC Linkage Project advanced our thinking about the common definitions of social risk and the precursors of social risk based on place, project, and proponent (what we coined as the 3Ps Framework). The 3Ps Framework incorporates multiple data sets—expert interviews, surveys, policy analysis, and scholarly literature—that point to the importance of place, proponent, and project when addressing factors commonly associated with social risk. Place-based factors underscore the importance of local knowledge when thinking about social considerations of a project. Proponent-based factors highlight the social risks involved given particular organisational values and behaviours of project funders, developers, or contractors. Finally, project-based factors emphasise the nature of the project itself, i.e., the size, sector, cumulative project environment, and the level of associated controversy. Combined, the 3Ps Framework and Social Risk Maturity Model provide organisations with a systematic and robust way to think about and begin to more consistently manage social risk.
I2S is currently testing a Social Risk Scanner Tool, based on our model to help our partners develop their social risk management capability. Sound interesting? Contact Industry Director, Kirsty O’Connell on
0411 100 734 to find out more or arrange a briefing.