Conceptualising social risk and business risk associated with private sector development projects

There are various definitions of social risk. For some, social risk pertains to social protection, and risk-taking is thought to enhance human welfare. For others, social risk is contrasted with empirical risk, where the perception of risk by lay members of society differs from that of experts in any given field. More recently, social risk has come to be associated with the potential future negative social impacts of corporate activities and private sector development on individuals and groups. This paper theorises the relationships between social risk and business risk in the context of private sector developments. Many business leaders continue to conflate social risk with their existing understandings of business risk, with social risk understood to be the risk to the business arising from the actions of community stakeholders. Conceiving of social risk in this way has implications for the discrete identification, prevention and mitigation of social and business risks and impacts, and has ramifications for corporate risk management strategies, as well as companies’ relationships with community stakeholders.