Voyage of compassion from risk to relief: a comparative exploration of risk management in humanitarian and commercial ventures

Commercial and humanitarian projects have very different missions and goals. Businesses are primarily driven by a mission to generate profits and create value for shareholders, with goals focused on financial success, market competitiveness and economic growth. In contrast, humanitarian projects are motivated by compassion, empathy and a desire to alleviate suffering, and improve the welfare of vulnerable people. Their goals go beyond financial gain and focus on positive social and humanitarian outcomes measured qualitatively, such as lives saved and community resilience. The long-term goals of commercial enterprises focus on sustainable business profitability and growth, while humanitarian projects focus on recovery, development and lasting positive change in communities affected by crises. These differences highlight fundamental changes in focus between for-profit commercial enterprises and socially important humanitarian projects.

Despite these differences, effective project management is equally essential for humanitarian projects aimed at alleviating suffering and improving the well-being of vulnerable populations. Humanitarian efforts conducted in complex and unpredictable environments face many risks that can undermine project success. This is where humanitarian project risk management (HPRM) becomes essential to ensure aid delivery is effective and minimises failures. Understanding HPRM involves identifying, assessing and mitigating risks, from logistical issues to security concerns.

Effective risk management for humanitarian projects overlaps with commercial risk management. For example, risk identification involves assessing the socio-political, economic and cultural context, including local infrastructure, potential conflicts and natural disasters. By involving key stakeholders, problems can be anticipated and mitigated. Risk assessment involves evaluating the potential impact and likelihood of identified risks, prioritising them based on severity, and focusing resources on critical areas. Risk mitigation includes developing flexible project plans, fostering collaboration and investing in staff training to ensure preparedness. Monitoring and evaluation through real-time systems and regular project reviews enable adaptive strategies. Proactive risk management is essential to successful care delivery in challenging environments, with an emphasis on an adaptive and holistic approach.

However, the profound differences between the twomakes risk management in humanitarian context challenging.

• Mission and purpose: driven by financial strength and profitability, companies strive to create value for shareholders and stakeholders. Impact is measured in terms of economic growth, job creation and market impact. Humanitarian projects aim to alleviate suffering, save lives and improve the welfare of vulnerable people. Impact is measured in terms of positive social and humanitarian outcomes, with the primary aim of meeting immediate and long-term needs.

• Stakeholder engagement: stakeholder engagement in business revolves around customers, shareholders, suppliers and regulators and focuses on meeting market needs and maximising shareholder value. Humanitarian projects involve a wide range of stakeholders, including local communities, governments, nongovernmental organisations (NGOs) and international organisations. The emphasis is on collaboration and collaboration to meet the immediate needs of vulnerable populations.

• Metrics: metrics include financial parameters such as profit margin, return on investment (ROI), market share, and customer satisfaction and success is often measured in monetary terms. Measures include quality indicators such as lives saved, improved health and education outcomes and community resilience. Success is measured by positive changes in human life.

• Timeline and long-term goals: companies operate with short- and long-term profitability goals by adapting to market trends, diversifying product offerings and achieving long-term sustainable business growth. Humanitarian projects have short-term goals related to immediate relief efforts and long-term goals related to the recovery, development and resilience of communities affected by a crisis.

• Risk tolerance: businesses adopt risk management strategies to protect their economic interests and maintain stability while dealing with risks such as market fluctuations, competition and supply chain disruptions. Humanitarian projects operate in unpredictable and complex environments,

managing risks such as security threats and cultural issues. Natural disasters are essential to ensure aid delivery under difficult circumstances.

To better understand the difference let’s look at an example. Consider the case of a multinational technology company. Its mission is to create innovative products, generate significant profits and maximise shareholder value. The goal is to dominate the consumer electronics market through cutting-edge technology and design, achieve financial success and maintain a competitive advantage. Driven by market needs and profitability, the long-term goals include expanding its product offerings, entering new market segments and maintaining strong financial performance. On the other hand, a humanitarian project run by an NGO aimed at providing emergency relief after a natural disaster, aims to alleviate suffering in affected communities, save lives and ensure the well-being of people facing immediate crisis. Driven by a commitment to compassion and social responsibility, its goal is to respond to the immediate needs of communities affected by disasters. The long-term goals of this humanitarian project include not only immediate relief efforts, but also reconstruction, community development and building resilience against future disasters.

The differences between commercial enterprises and humanitarian projects are profound and shape the different approaches to risk management. The fundamental difference in focus between for-profit commercial enterprises and socially important humanitarian projects is clear and affects everything from missions to long-term goals. While business is driven by a desire for profit, economic growth and market competitiveness, humanitarian projects are driven by compassion, empathy and a desire to alleviate suffering. This dichotomy extends to metrics as well. While businesses measure success financially, humanitarian projects measure success using qualitative indicators such as lives saved and community resilience, which deems schedules and long-term goals further disconnected. Companies focus on sustainable profitability and growth, as opposed to humanitarian projects that prioritise recovery, development and sustainable positive change. Although risk management practices are common, the unique circumstances and objectives of commercial enterprises and humanitarian projects highlight the need for customised approaches. Recognising these differences is important to understanding the different ways organisations can foster positive change, whether on the board or on the front lines of humanitarian work. Due to the complexity of impact-driven initiatives, we need to understand these differences to foster a more holistic understanding of the different pathways for creating positive change in the world.

If this topic is of interest to you, and you would like to hear more, please keep an eye out in November for the Risk Management conference on humanitarian risk.