change based risk management

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This article was first published on May 17, 2021.

While change is the only constant in life, there are certainly periods where change is more amplified. We currently find ourselves in one of those periods. The world and our key industries are not immune to the ripple effects of the global pandemic. As an example, for the financial services industry, there are many drivers of change: in the short term, retail banks are facing downward pressures on net income due to record-low interest rates and increasing delinquency rates, and the need to trim costs quickly; in the medium term, new remote working routines are further accelerating digitization, automation, and disintermediation. As a result, business and operating models are trying to adapt to the “new normal.”

The firms able to effectively deliver change will thrive and are more likely to emerge stronger from these changes. However, as recent social science research has shown, delivering change is no easy task: humans have a natural bias against change. Failing to drive change is a challenge to the competitiveness and sustainability of any firm, creating monetary costs, eroding trust with customers and investors, and weighing on culture and employee engagement. On the flip side, firms that successfully deliver change set off a self-reinforcing feedback loop that increases profitability and productivity, builds trust with stakeholders, and attracts top talent.

An often forgotten institutional ‘muscle’ for firms is the ability to effectively manage change risk —the risk that a change program fails to deliver the desired goals. We believe that most firms do not proactively manage change risk in a way that commensurate with the benefits of success and the costs of failure. Effectively managing change risk is a necessary ‘muscle’ to reduce, preempt, mitigate, and manage the challenges that come with (intents of) transformation, without bringing decision paralysis or stifling innovation in the organization. We refer to change risk as a ‘silent risk’ because this ‘muscle’ is often neglected and, too often, that neglect is one of the root causes behind the inability to drive to the desired outcomes.

In our paper, we present an approach to proactively manage change risk, including:

• How to manage change across the end-to-end change lifecycle, to ensure firms develop fit for purpose mechanisms
• How change risk management is a key component of the journey, and the best ways to understand drivers of successful change
• Recommendation for four key change management capabilities, a change risk management framework, change delivery igniters, workforce change capacity management, and a process for initiative prioritization; and actions to help leaders make change management a priority

Below is an excerpt from the report, for the full PDF version, please click here .

Our views on successful change

Effective change boils down to directing energy and aligning efforts toward three key elements:

• The strategy and thinking
• The people and behaviors
• The underlying infrastructure

We call these elements the Head, the Heart, and the Guts of an organization. Successful change should have risk management embedded into these key elements.

Successful change occurs when the Head, the Heart, and the Guts are fully aligned, resulting in an organization that has: (1) the willingness to change—through leadership, personal drive, and the identification of strategic value; and (2) the ability to execute—through an adequate workforce, the right infrastructure, and a clear roadmap.

Too often, firms facing change tend to focus on the Head at the expense of the Guts and, especially, the Heart. Such firms often struggle to achieve successful change because lasting change requires individuals to collectively change behaviors. For example, a firm does not become more customer-centric when rolling out a new top-down campaign or training module. Rather, the firm becomes customer-centric when the workforce begins adopting customer-centric behaviors—the way customer interactions play out; the way products are configured; and the way senior leadership communicates and makes decisions.

Change is the only constant in life Heraclitus, c. 535 BCE – 475 BCE.

Experience and research indicate that, for change to occur, each level of the organization needs to understand the objectives and purpose of the change, as well as the new behaviors to adopt. Change experts across the globe call these “vital behaviors”—the smallest actions that, if consistently repeated, will lead to the intended outcomes.

In driving change , the ability to manage change risk needs to be developed in the Guts (through risk management capabilities); the Heart (through an understanding of the workforce stoppers and capacity in the firm); and the Head (through the incorporation of change risk into the firm strategy). Our research shows that, historically, neither risk managers nor front-line risk owners have paid enough attention to managing change risk. If firms believe—as we do—that a better managed change risk is a key success factor, firms must pay more attention to driving alignment between Heart, Head, and Guts in order to achieve successful change, and also appropriately embed risk management capabilities across these elements.

We have identified four capabilities for firms that can increase opportunities to drive effective change management:

1. Change risk management framework: Adapt the firm’s overall risk management framework to cover change risk across the lifecycle

2. Change igniters: Clear obstacles to build a change-oriented organization by diagnosing and addressing organizational weaknesses

3. Workforce change capacity management: Monitor change load and change fatigue, as well as improve organizational agility

4. Initiative prioritization: Develop a process for assessing change initiatives to maximize impact within change capacity

We believe firms that achieve these four capabilities will see an increased efficacy and decreased risk associated with the change programs. Returning to the change lifecycle in the exhibit below, we show how these capabilities can reinforce each stage and broaden the role risk management teams play well beyond the implementation and go-live steps.

Actions for effective change risk management

Given both, the necessity of achieving successful change in the current tumultuous world and the high cost of failure, organizations cannot afford to take a reactive or narrow approach to change risk management.

We recommend front-line and risk management leaders:

Overall, firms that succeed in incorporating change risk management into processes and culture will become more agile and more resilient, while firms that lag will run the risk of being caught flat-footed when the next disruption arrives. Firms that proactively manage change risk will be able to overcome the silent risk that hinders growth and emerge as winners.

The authors would like to acknowledge and thank Jonathan Lee and Rutger von Post for their contributions to this paper.

• Financial Services
• Risk Management for Financial Services
• Ramy Farha,
• Chris DeBrusk, and
• Antonio Tugores

Striving For Operational Resilience: The Questions Boards And Senior Management Should Ask

Operational resilience has become a key agenda item for boards and senior management. Increasing complexity in processes and IT, dependence on third parties, interconnectedness and data sharing, and sophistication of malicious actors have made disruptions more likely and their impact more severe. High-profile examples of business and operational disruptions abound, covering all segments of the financial services industry.

Non-Financial Risk Convergence And Integration

Non-Financial Risk Management has become more complex due to rapid shifts in technology, automation and greater dependence by banks on systems instead of people.

What Could Go Wrong? How to Manage Risk for Successful Change Initiatives

David Shore, instructor of Strategies for Leading Successful Change Initiatives, shares six steps to effective risk management.

David Shore

Every change initiative comes with inherent risk. But too often we shy away from exploring the potential pitfalls at the outset. If we are to succeed, however, we should embrace risk. After all, change initiatives are born from a risk analysis — a conclusion that the risk of doing nothing is higher than the risk of embarking on an experimental initiative.

When leading a change initiative, you should focus on acknowledging, anticipating, and managing risk — instead of avoiding it at all costs.

The good news is that risk management is not rocket science. Through my extensive work with change initiatives, I’ve identified six key steps to effective risk management. By following these steps on your initiative, I hope you’ll discover how embracing risk can lead to success.

Six Steps to Effective Risk Management

1. at the start, identify the risks you face..

Make a list. Formalize this process by holding a  premortem . Just as a  postmortem  enables the team to assess what went right or wrong after the fact, a  premortem  provides a space for thinking in advance about what could go wrong during the project. As you and your team brainstorm, you should cast a wide net. Consider factors intrinsic to the project and also those outside the team’s control. For example, consider the risk of potential resistance from stakeholders, which nearly always arises in change initiatives.

2. Quantify the Risks.

Not all risks are created equal. The risk of a slight delay in funding might be very different from the risk of a major partner pulling out of a joint venture. By quantifying the risk, you decrease the influence emotions can play and allow different risks to be compared. One method is to assess the risk along two dimensions: the probability of the risk occurring, and the impact the risk would have if it actually occurred. Using a scale from one to five, you can evaluate each of these dimensions for the risks you’ve identified. Then, you can multiply the two numbers to produce a risk factor from 1 to 25.

3. Establish a Risk Threshold.

Consider your initiative’s tolerance for risk and then establish a threshold. If you are not sure where to start, set your threshold at the center of your risk scale. For example, on a scale of 1 to 25, start with 12 as your threshold. Compare your quantified risks to the threshold and then spend some time thinking about the ones that exceed the threshold and then adjust as needed.

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4. Create Contingency Plans.

For each risk, engage in a thought experiment. First, think about what steps you can take, if any, to eliminate or mitigate the risk. It may be that a small adjustment to your plan will reduce the probability to zero. Second, think about what you plan to do if that possibility becomes reality — in other words, if the risk becomes an issue. Will the team be able to work around it easily? Or will the magnitude of that risk require rethinking your entire initiative? The more you plan for risks ahead of time, the better prepared you will be — and the more successful you will be in keeping your initiative on track

5. Monitor Risks over Time.

Along with the Gantt charts, status reports, dashboards, and other tools that help you assess your progress, you can also create a Risk Register (also called a Risk Log) that sets out all the risks, their risk factors, and current status. As you reach a particular milestone, perhaps one risk can be eliminated from consideration because it is no longer possible. Perhaps another risk has created an issue that needs to be dealt with. Or perhaps a new risk has been identified and should be evaluated. Your goal is to keep a close eye on risk throughout the project.

6. Consider Assigning a Risk Watcher.

You may want to identify a particular team member who has the responsibility to monitor risks and raise flags. Teams working on change initiatives are by definition optimistic. While everyone else on the team might be saying, “This will go fine,” someone needs to be able to say, “Clouds are rolling in” or “We’ve said that for the last six meetings and it hasn’t happened.”

To manage risk successfully, you need to be proactive in anticipating it. And to lead a change initiative successfully, you need to be an honest communicator. Talk with your team and with upper management about risks to the project and issues that crop up along the way. As a manager, you can improve your ability to manage risk by fostering a culture that values positive thinking while encouraging open discussions about problems.

Embracing change means embracing risk. With the right pragmatic approach, you can become a more effective change agent by understanding risk as a natural part of change — and by anticipating and managing it.

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About the Author

Shore is an authority on change management recognized as distinguished professor at Tianjin University of Finance and Economics and 2015 Top Thought Leader in Trust.

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How to Identify and Mitigate Risks During the Change Process

Change Strategists

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Are you in the process of making changes within your organization? Whether it’s a new software implementation or a company-wide restructuring, change can bring about uncertainty and risk. It’s important to identify and mitigate these risks to ensure a smooth transition and minimize potential negative impacts.

Effective risk management is essential for any successful change process. By conducting a thorough risk assessment, developing a mitigation strategy, and implementing and monitoring risk controls, you can identify potential issues before they become major problems.

In this article, we will provide you with a step-by-step guide on how to identify and mitigate risks during the change process. By following these guidelines, you can ensure that your change process is successful and your organization can thrive in the long run.

Understanding the Importance of Risk Management

You gotta know that managing risk is crucial when making any changes. As you move forward with a change process, there are a lot of uncertainties and potential pitfalls that could arise. That’s where risk identification comes in.

By analyzing the potential risks associated with the change, you can better prepare for them and minimize their impact on the project. Once you’ve identified the potential risks, it’s important to develop risk mitigation techniques.

This means coming up with a plan to reduce the likelihood or impact of each potential risk. For example, if you’re implementing new software, you might identify the risk that the system could crash during the implementation process. A mitigation technique for this risk might be to conduct thorough testing before rolling out the new software to ensure it’s stable.

Effective risk management requires ongoing attention throughout the change process. You can’t just identify the risks and develop mitigation techniques at the beginning of the project and call it good. You need to consistently monitor and reassess the risks as the project progresses.

This will allow you to adjust your mitigation techniques as needed and ensure that you’re always prepared for any potential risks that may arise.

Conducting a Risk Assessment

Now that you’ve gathered all necessary information, it’s time to assess potential hazards and determine the likelihood of negative outcomes. Conducting a risk assessment is crucial in identifying common risks and minimizing their impact on your change process. Here are a few tips to help you conduct a successful risk assessment:

• Use risk assessment tools : There are various tools available to assess risks, such as SWOT analysis, PEST analysis, and FMEA. These tools help you identify the strengths, weaknesses, opportunities, and threats of your change process. They also help you identify potential risks and develop strategies to mitigate them.
• Involve stakeholders : Your stakeholders have valuable insights that can help you identify potential risks. Involve them in the risk assessment process to gain a better understanding of the potential challenges and their impact on the change process. This will also help you gain their support for the change.
• Prioritize risks : Not all risks are equal in terms of their impact on the change process. Prioritize the risks based on their likelihood and severity. This will help you focus on the most critical risks and develop strategies to mitigate them.

By conducting a risk assessment, you can identify potential hazards and develop strategies to mitigate them. This will help you minimize the impact on your change process and ensure its success. Remember, risk management is an ongoing process, and you should regularly review and update your risk assessment to ensure its effectiveness.

Developing a Mitigation Strategy

In the current section, we’ll be developing a plan to minimize the negative impact of potential hazards on our change goals. Change management is not just about identifying risks but also about developing a mitigation strategy to respond to them. This is where risk response comes in. Risk response involves developing a plan to mitigate the impact of risks on the change process.

To develop a mitigation strategy for potential hazards, it is important to understand the different types of risks that might occur during the change process. You can do this by conducting a thorough risk assessment, which we have discussed in the previous subtopic. Once you have identified the different types of risks, you can then begin to develop a mitigation strategy that addresses each risk.

A useful way to develop a mitigation strategy is to use a table that outlines each risk, its potential impact, and the actions that can be taken to mitigate it. This table can be used as a reference throughout the change process to ensure that all risks are being addressed. By taking a proactive approach to risk management, you can ensure that your change process is successful and that any potential hazards are minimized.

Implementing and Monitoring Risk Controls

We’ll now focus on putting our plan into action to ensure that any potential issues are kept in check. After developing a mitigation strategy, it’s crucial to implement and monitor risk controls to ensure their effectiveness.

Implementing risk controls means applying the plans and actions outlined in the mitigation strategy. This includes assigning tasks to team members, creating a timeline for completion, and ensuring that everyone is aware of their responsibilities.

Continuous monitoring is essential to ensure that risk controls are effective. It involves regularly checking whether the risk controls are working as intended and if any new risks have emerged. Monitoring can be done through regular meetings with team members, reviewing progress reports, and conducting risk assessments.

Monitoring can also help identify areas for improvement in the risk controls and provide an opportunity to adjust the mitigation strategy if necessary.

In summary, implementing and monitoring risk controls is crucial in identifying and mitigating potential risks during the change process. By putting the mitigation strategy into action and continuously monitoring the effectiveness of risk controls, organizations can reduce the likelihood of issues arising. This approach ensures that the organization is well-prepared to handle any unforeseen challenges that may arise during the change process.

Creating a Contingency Plan for Unforeseen Circumstances

Preparing for the unexpected is like having a safety net – it’s important to have a contingency plan in place to handle any unforeseen circumstances that may arise during the implementation of the risk controls.

Contingency planning involves identifying potential risks and developing risk response strategies to mitigate them. This process helps to ensure that the project stays on track and that any unexpected events are handled effectively.

A contingency plan should include a detailed description of potential risks and how they will be addressed. This plan should also identify the key stakeholders who will be responsible for executing the plan and specify the timeline for implementation.

In addition, the contingency plan should outline the communication strategy for informing all stakeholders of the unforeseen circumstances and the actions that will be taken to address them.

In summary, creating a contingency plan is an essential part of managing risks during the change process. It helps to ensure that the project stays on track and that any unforeseen circumstances are handled effectively. By identifying potential risks and developing risk response strategies, you can mitigate the impact of unexpected events and ensure the success of your project.

How Can Effective Change Communication Mitigate Risks During the Change Process?

Effective change communication planning insights can help mitigate risks during the change process by keeping all stakeholders informed and engaged. Clear and timely communication can address concerns, manage expectations, and foster support for the change. By providing relevant information, addressing potential resistance, and ensuring transparency, communication planning insights can help minimize disruptions and maximize successful change implementation.

In conclusion, managing risks during the change process is a critical task that requires your utmost attention. By conducting a thorough risk assessment, you can identify potential risks and develop a mitigation strategy that will help reduce the likelihood of these risks occurring.

This will ensure that your change process runs smoothly and efficiently, with minimal disruption to your organization. However, it’s important to remember that risks are an inevitable part of any change process, and it’s impossible to eliminate them entirely.

Therefore, it’s essential to implement and monitor risk controls, and to create a contingency plan for unforeseen circumstances. As the saying goes, “expect the best, but prepare for the worst.” By taking a proactive approach to risk management, you can minimize the impact of any unforeseen events and ensure that your change process is successful.

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If you want to grow your business visit Growth Jetpack program . And if you want the best technology to grow your online brand visit Clixoni .

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Value and resilience through better risk management

Today’s corporate leaders navigate a complex environment that is changing at an ever-accelerating pace. Digital technology underlies much of the change. Business models are being transformed by new waves of automation, based on robotics and artificial intelligence. Producers and consumers are making faster decisions, with preferences shifting under the influence of social media and trending news. New types of digital companies are exploiting the changes, disrupting traditional market leaders and business models. And as companies digitize more parts of their organization, the danger of cyberattacks and breaches of all kinds grows.

Stay current on your favorite topics

Beyond cyberspace, the risk environment is equally challenging. Regulation enjoys broad popular support in many sectors and regions; where it is tightening, it is putting stresses on profitability. Climate change is affecting operations and consumers and regulators are also making demands for better business conduct in relation to the natural environment. Geopolitical uncertainties alter business conditions and challenge the footprints of multinationals. Corporate reputations are vulnerable to single events, as risks once thought to have a limited probability of occurrence are actually materializing.

The role of the board and senior executives

Risk management at nonfinancial companies has not kept pace with this evolution. For many nonfinancial corporates, risk management remains an underdeveloped and siloed capability in the organization, receiving limited attention from the most senior leaders. From over 1,100 respondents to McKinsey’s Global Board Survey for 2017 , we discovered that risk management remains a relatively low-priority topic at board meetings (exhibit).

A long way to go

Boards spend only 9 percent of their time on risk—slightly less than they did in 2015. Other questions in the survey revealed that only 6 percent of respondents believe that they are effective in managing risk (again, less than in 2015). Some individual risk areas are relatively neglected, and even cybersecurity, a core risk area with increasing importance, is addressed by only 36 percent of boards. While many senior executives stay focused on strategy and performance management, they often fail to challenge capabilities or strategic decisions from a risk perspective (see sidebar, “A long way to go”). A reactive approach to risks remains too common, with action taken only after things go wrong. The result is that boards and senior executives needlessly put their companies at risk, while personally taking on higher legal and reputational liabilities.

Boards have a critical role to play in developing risk-management capabilities at the companies they oversee. First, boards need to ensure that a robust risk-management operating model is in place. Such a model allows companies to understand and prioritize risks, set their risk appetite, and measure their performance against these risks. The model should enable the board and senior executives to work with businesses to eliminate exposures outside the company’s appetite statement, reducing the risk profile where warranted, through such means as quality controls and other operational processes. On strategic opportunities and risk trade-offs, boards should foster explicit discussions and decision making among top management and the businesses. This will enable the efficient deployment of scarce risk resources and the active, coordinated management of risks across the organization. Companies will then be prepared to address and manage emerging crises when risks do materialize.

A sectoral view of risks

Most companies operate in a complex, industry-specific risk environment. They must navigate macroeconomic and geopolitical uncertainties and face risks arising in the areas of strategy, finance, products, operations, and compliance and conduct. In some sectors, companies have developed advanced approaches to managing risks that are specific to their business models. These approaches can sustain significant value. At the same time companies are challenged by emerging types of risks for which they need to develop effective mitigation plans; in their absence, the losses from serious risk events can be crippling.

• Automotive companies are controlling supply-chain risks with sophisticated monitoring models that allow OEMs to identify potential risks upfront across the supply chain. At the same time, auto companies must address the strategic challenge of shifting toward electric-powered and autonomous vehicles.
• Pharma companies seek to manage the downside risk of large investments in their product portfolio and pipeline, while addressing product quality and patient safety to comply with relevant regulatory requirements.
• Oil and gas, steel, and energy companies apply advanced approaches to manage the negative effects of financial markets and commodity-price volatility. As social and political demands for cleaner energy are increasing, these companies are actively pursuing growth opportunities to shift their portfolios in anticipation of an energy transition and a low-carbon future.
• Consumer-goods companies protect their reputation and brand value through sound practices to manage product quality as well as labor conditions in their production facilities. Yet they are constantly challenged to meet consumers’ ever-changing tastes and needs, as well as consumer-protection regulations.

Toward proactive risk management

An approach based on adherence to minimum regulatory standards and avoidance of financial loss creates risk in itself. In a passive stance, companies cannot shape an optimal risk profile according to their business models nor adequately manage a fast-moving crisis. Eschewing a risk approach comprised of short-term performance initiatives focused on revenue and costs, top performers deem risk management as a strategic asset, which can sustain significant value over the long term. Inherent in the proactive approach are several essential components.

Strategic decision making

More rigorous, debiased strategic decision making can enhance the longer-term resilience of a company’s business model, particularly in volatile markets or externally challenged industries. Research shows that the active, regular reevaluation of resource allocation, based on sound assessments of risk and return trade-offs (such as entering markets where the business model is superior to the competition), creates more value and better shareholder returns. 1 See, for example, Yuval Atsmon, “ How nimble resource allocation can double your company’s value ,” August 2016; William N. Thorndike, Jr., The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success , Boston, MA: Harvard Business Review Press, 2012; Rebecca Darr and Tim Koller, “ How to build an alliance against corporate short-termism ,” January 2017. Flexibility is empowering in a dynamic marketplace. Many companies use hedging strategies to insure against market uncertainties. Airlines, for example, have been known to hedge future exposures to fuel-price fluctuations, a move that can help maintain profitability when prices climb. Likewise, strategic investing, based on a longer-term perspective and a deep understanding of a company’s core proposition, generates more value than opportunistic moves aiming at a short-term bump in the share price.

Debiasing and stress-testing

Approaches that include debiasing and stress-testing help senior executives consider previously overlooked sources of uncertainty to judge whether the company’s risk-bearing capacity can absorb their potential impact. A utility in Germany, for example, improved decision making by taking action to mitigate behavioral biases. As a result, it separated its renewables business from its conventional power-generation operations. In the aftermath of the Fukushima disaster, which sharply raised interest in environmentally friendly power generation, the utility’s move led to a significant positive effect on its share price (15 percent above the industry index).

Higher-quality products and safety standards

Investments in product quality and safety standards can bring significant returns. One form this takes in the energy sector is reduced damage and maintenance costs. At one international energy company, improved safety standards led to a 30 percent reduction in the frequency of hazardous incidents. Auto companies with reputations built on safety can command higher prices for their vehicles, while the better reputation created by higher quality standards in pharma creates obvious advantages. As well as the boost in demand that comes from a reputation for quality, companies can significantly reduce their remediation costs—McKinsey research suggests that pharma companies suffering from quality issues lose annual revenue equal to 4 to 5 percent of cost of goods sold.

Comprehensive operative controls

These can lead to more efficient and effective processes that are less prone to disruption when risks materialize. In the auto sector, companies can ensure stable production and sales by mitigating the risk of supply-chain disruption. Following the 2011 earthquake and tsunami, a leading automaker probed potential supply bottlenecks and took appropriate action. After an earthquake in 2016, the company quickly redirected production of affected parts to other locations, avoiding costly disruptions. In high-tech, companies applying superior supply-chain risk management can achieve lasting cost savings and higher margins. One global computer company addressed these risks with a dedicated program that saved $500 million during its first six years. The program used risk-informed contracts, enabling suppliers to lower the costs and risks of doing business with the company. The measures achieved supply assurance for key components, particularly during market shortages, improved cost predictability for components that have volatile costs, and optimized inventory levels internally and at suppliers.

Stronger ethical and societal standards

To achieve standing among customers, employees, business partners, and the public, companies can apply ethical controls on corporate practices end to end. If appropriately publicized and linked to corporate social responsibility, a program of better ethical standards can achieve significant returns in the form of heightened reputation and brand recognition. Customers, for example, are increasingly willing to pay a premium for products of companies that adhere to tighter standards. Employees too appreciate being associated with more ethical companies, offering a better working environment and contributing to society.

The three dimensions of effective risk management

Ideally, risk management and compliance are addressed as strategic priorities by corporate leadership and day-to-day management. More often the reality is that these areas are delegated to a few people at the corporate center working in isolation from the rest of the business. By contrast, revenue growth or cost savings are deeply embedded in corporate culture, linked explicitly to profit-and-loss (P&L) performance at the company level. Somewhere in the middle are specific control capabilities regarding, for example, product safety, secure IT development and deployment, or financial auditing.

Would you like to learn more about our Risk Practice ?

To change this picture, leadership must commit to building robust, effective risk management. The project is three-dimensional: 1) the risk operating model, consisting of the main risk management processes; 2) a governance and accountability structure around these processes, leading from the business up to the board level; and 3) best-practice crisis preparedness, including a well-articulated response playbook if the worst case materializes.

1. Developing an effective risk operating model

The operating model consists of two layers, an enterprise risk management (ERM) framework and individual frameworks for each type of risk. The ERM framework is used to identify risks across the organization, define the overall risk appetite, and implement the appropriate controls to ensure that the risk appetite is respected. Finally, the overarching framework puts in place a system of timely reporting and corresponding actions on risk to the board and senior management. The risk-specific frameworks address all risks that are being managed. These can be grouped in categories, such as financial, nonfinancial, and strategic. Financial risks, such as liquidity, market, and credit risks, are managed by adhering to appropriate limit structures; nonfinancial risks, by implementing adequate process controls; strategic risks, by challenging key decisions with formalized approaches such as debiasing, scenario analyses, and stress testing. While financial and strategic risks are typically managed according to the risk-return trade-off, for nonfinancial risks, the potential downside is often the key consideration.

Finding the right level of risk appetite

Companies need to find the right level of risk appetite, which helps ensure long-term resilience and performance. Risk appetite that is too relaxed or too restrictive can have severe consequences on company financials, as the following two examples indicate:

Too relaxed. One nuclear energy company set its standards for steel equipment in the 1980s and did not review them even when the regulations changed. When the new higher standards were applied to the manufacture of equipment for nuclear power plants, the company fell short of compliance. An earlier adaptation of its risk appetite and tolerance levels would have been significantly less costly.

Too restrictive. A pharma company set quality tolerances to produce a drug to a significantly stricter level than what was required by regulation. At the beginning of production, tolerance intervals could be fulfilled, but over time, quality could no longer be assured at the initial level. The company was unable to lower standards, as these had been communicated to the regulators. Ultimately, production processes had to be upgraded at a significant cost to maintain the original tolerances.

As well as assessing risk based on likelihood and impact, companies must also assess their ability to respond to emerging risks. Capabilities and capacities needed to manage these risks should be evaluated and gaps filled accordingly. Of particular importance in crisis management is the timeliness of an effective response when things go awry. The highly likely, high-impact risk events on which risk management focuses most of its attention often emerge with disarming velocity, taking many companies unawares. To be effective, the enterprise risk management framework must ensure that the two layers are seamlessly integrated. It does this by providing clarity on risk definitions and appetite as well as controls and reporting.

• Taxonomy. A company-wide risk taxonomy should clearly and comprehensively define risks; the taxonomy should be strictly respected in the definition of risk appetite, in the development of risk policy and strategy, and in risk reporting. Taxonomies are usually industry-specific, covering strategic, regulatory, and product risks relevant to the industry. They are also determined by company characteristics, including the business model and geographical footprint (to incorporate specific country and legal risks). Proven risk-assessment tools need to be adopted and enhanced continuously with new techniques, so that newer risks (such as cyberrisk) are addressed as well as more familiar risks.
• Risk appetite. A clear definition of risk appetite will translate risk-return trade-offs into explicit thresholds and limits for financial and strategic risks, such as economic capital, cash-flow at risk, or stressed metrics. In the case of nonfinancial risks like operational and compliance risks, the risk appetite will be based on overall loss limits, categorized into inherent and residual risks (see sidebar, “Finding the right level of risk appetite”).
• Risk control processes. Effective risk control processes ensure that risk thresholds for the specified risk appetite are upheld at all levels of the organization. Leading companies are increasingly building their control processes around big data and advanced analytics. These powerful new capabilities can greatly increase the effectiveness and efficiency of risk monitoring processes. Machine-learning tools, for example, can be very effective in monitoring fraud and prioritizing investigations; automated natural language processing within complaints management can be used to monitor conduct risk.
• Risk reporting. Decision making should be informed with risk reporting. Companies can regularly provide boards and senior executives with insights on risk, identifying the most relevant strategic risks. The objective is to ensure that an independent risk view, encompassing all levels of the organization, is embedded into the planning process. In this way, the risk profile can be upheld in the management of business initiatives and decisions affecting the quality of processes and products. Techniques like debiasing and the use of scenarios can help overcome biases toward fulfilment of short-term goals. A North American oil producer developed a strategic hypothesis given uncertainties in global and regional oil markets. The company used risk modelling to test assumptions about cash flow under different scenarios and embedded these analyses into the reports reviewed by senior management and the board. Weak points in the strategy were thereby identified and mitigating actions taken.

2. Toward robust risk governance, organization, and culture

The risk operating model must be managed through an effective governance structure and organization with clear accountabilities. The governance model maintains a risk culture that strongly reinforces better risk and compliance management across the three lines of defense—business and operations, the compliance and risk functions, and audit. The approach recognizes the inherent contradiction in the first line between performance (revenue and costs) and risk (losses). The role of the second line is to review and challenge the first line on the effectiveness of its risk processes and controls, while the third line, audit, ensures that the lines one and two are functioning as intended.

• Three lines of defense. Effective implementation of the three lines involves the sharp definition of lines one and two at all levels, from the group level through the lines of business, to the regional and legal entity levels. Accountabilities regarding risk and control management must be clear. Risk governance may differ by risk type: financial risks are usually managed centrally, while operational risks are deeply embedded into company processes. The operational risk of any line of business is managed by the business owning the product-development, production, and sales processes. This usually translates into forms of quality control, but the business must also balance the broader impact of risk and P&L. In the development of new diesel engines, automakers lost sight of the balance between compliance risk and the additional cost to meet emission standards, with disastrous results. Risk or compliance functions can only complement these activities by independently reviewing the adequacy of operational risk management, such as through technical standards and controls.
• Reviewing the risk appetite and risk profile. Of central importance within the governance structure are the committees that define the risk appetite, including the parameters for doing business. These committees also make specific decisions on top risks and review the control environment for enhancements as the company’s risk profile changes. Good governance in this case means that risk decisions are considered within the existing divisional, regional, and senior-management governance structure of a company, supported by risk, compliance, and audit committees.
• Integrated risk and compliance governance setup. A robust and adequately staffed risk and compliance organization supports all risk processes. The integrated risk and compliance organization provides for single ownership of the group-wide ERM framework and standards, appropriate clustering of second-line functions, a clear matrix between divisions and control functions, and centralized or local control as needed. A clear trend is observable whereby the ERM layer responsible for group-wide standards, risk processes, and reporting becomes consolidated, whereas the expert teams setting and monitoring specific control standards for the business (including standards for commercial, technical compliance, IT or cyberrisks) become specialized teams covering both regulatory compliance as well as risk aspects.
• Resources. Appropriate resources are a critical factor in successful risk governance. The size of the compliance, risk, audit, and legal functions of nonfinancial companies (0.5 for every 100 employees, on average), are usually much smaller than those of banks (6.9 for every 100 employees). The disparity is partly a natural outcome of financial regulation, but some part of it reflects a capability gap in nonfinancial corporates. These companies usually devote most of their risk and control resources in sector-specific areas, such as health and safety for airlines and nuclear power companies or quality assurance for pharmaceutical companies. The same companies can, however, neglect to provide sufficient resources to monitor highly significant risks, such as cyberrisk or large investments.
• Risk culture. An enhanced risk culture covers mind-sets and behaviors across the organization. A shared understanding is fostered of key risks and risk management, with leaders acting as role models. Especially important are capability-building programs on risk as well as formal mechanisms to assess and reinforce sound risk management practices.

An enhanced risk culture covers mind-sets and behaviors across the organization. A shared understanding is fostered of key risks and risk management, with leaders acting as role models.

3. Crisis preparedness and response

A high-performing, effective risk operating model and governance structure, with a well-developed risk culture minimize the probability of corporate crises , without, of course, completely eliminating them. When unexpected crises strike at high velocity, multinational companies can lose billions in value in the first days and soon find themselves struggling to keep their market position. A best-in-class risk management environment provides the ideal conditions for preparation and response.

• Ensure board leadership. The most important action companies can take to prepare for crises is to ensure that the effort is led by the board and senior management. Top leadership must define the main expected threats, the worst-case scenarios, and the actions and communications that will be accordingly rolled out. For each threat, hypothetical scenarios should be developed for how a crisis will unfold, based on previous crises within and beyond the company’s industry and region.
• Strengthen resilience. By mapping patterns that arose in previous crises, companies can test their own resilience, challenging key areas across the organization for potential weaknesses. Targeted countermeasures can then be developed in advance to strengthen resilience. This crucial aspect of crisis preparedness can involve reviewing and revising the terms and conditions for key suppliers, shoring up financials to ensure short-term availability of cash, or investing in advanced cybersecurity measures to protect essential data and software in the event of failures and breaches.
• Develop action plans and communications. Once these assessments are complete and resilience-building countermeasures are in place, the company can then develop action plans for each threat. The plans must be well articulated, founded on past crises, and address operational and technical planning, financial planning, third-party management, and legal planning. Care should be taken to develop an optimally responsive communications strategy as well. The correct strategy will enable frontline responders to keep pace with or stay ahead of unfolding crises. Communications failures can turn manageable crises into irredeemable catastrophes. Companies need to have appropriate scripts and process logic in place detailing the response to crisis situations, communicated to all levels of the organization and well anchored there. Airlines provide an example of the well-articulated response, in their preparedness for an accident or crash. Not only are detailed scripts in place, but regular simulations are held to train employees at all levels of the company.
• Train managers at all levels. The company should train key managers at multiple levels on what to expect and enable them to feel the pressures and emotions in a simulated environment. Doing this repeatedly and in a richer way each time will significantly improve the company’s response capabilities in a real crisis situation, even though the crisis may not be precisely the one for which managers have been trained. They will also be valuable learning exercises in their own right.
• Put in place a detailed crisis-response playbook. While each crisis can unfold in unique and unpredictable ways, companies can follow a few fundamental principles of crisis response in all situations. First, establish control immediately after the crisis hits, by closely determining the level of exposure to the threat and identifying a crisis-response leader, not necessarily the CEO, who will direct appropriate actions accordingly. Second, involved parties—such as customers, employees, shareholders, suppliers, government agencies, the media, and the wider public—must be effectively engaged with a dynamic communications strategy. Third, an operational and technical “war room” should be set up, to stabilize primary threats and determine which activities to sustain and which to suspend (identifying and reaching out to critical suppliers). Finally, a deliberate effort must be made to address and neutralize the root cause of the crisis and so bring it to an end as soon as possible.

In a digitized, networked world, with globalized supply chains and complex financial interdependencies, the risk environment has grown more perilous and costly. A holistic approach to risk management, based on the lessons, good and bad, of leading companies and financial institutions, can derive value from that environment. The path to risk resilience that is emerging is an effort, led by the board and senior management, to establish the right risk profile and appetite. Success depends on the support of a thriving risk culture and state-of-the-art crisis preparedness and response. Far from minimal regulatory adherence and loss avoidance, the optimal approach to risk management consists of fundamentally strategic capabilities, deeply embedded across the organization.

Daniela Gius is a senior expert in McKinsey’s Hamburg office, Jean-Christophe Mieszala is a senior partner in the Paris office, Ernestos Panayiotou is a partner in the Athens office, and Thomas Poppensieker is a senior partner in the Munich office.

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Managing Risks: A New Framework

• Robert S. Kaplan
• Anette Mikes

Risk management is too often treated as a compliance issue that can be solved by drawing up lots of rules and making sure that all employees follow them. Many such rules, of course, are sensible and do reduce some risks that could severely damage a company. But rules-based risk management will not diminish either the likelihood or the impact of a disaster such as Deepwater Horizon, just as it did not prevent the failure of many financial institutions during the 2007–2008 credit crisis.

In this article, Robert S. Kaplan and Anette Mikes present a categorization of risk that allows executives to understand the qualitative distinctions between the types of risks that organizations face. Preventable risks, arising from within the organization, are controllable and ought to be eliminated or avoided. Examples are the risks from employees’ and managers’ unauthorized, unethical, or inappropriate actions and the risks from breakdowns in routine operational processes. Strategy risks are those a company voluntarily assumes in order to generate superior returns from its strategy. External risks arise from events outside the company and are beyond its influence or control. Sources of these risks include natural and political disasters and major macroeconomic shifts. Risk events from any category can be fatal to a company’s strategy and even to its survival.

Companies should tailor their risk management processes to these different risk categories. A rules-based approach is effective for managing preventable risks, whereas strategy risks require a fundamentally different approach based on open and explicit risk discussions. To anticipate and mitigate the impact of major external risks, companies can call on tools such as war-gaming and scenario analysis.

Smart companies match their approach to the nature of the threats they face.

Editors’ note: Since this issue of HBR went to press, JP Morgan, whose risk management practices are highlighted in this article, revealed significant trading losses at one of its units. The authors provide their commentary on this turn of events in their contribution to HBR’s Insight Center on Managing Risky Behavior.

• Robert S. Kaplan is a senior fellow and the Marvin Bower Professor of Leadership Development emeritus at Harvard Business School. He coauthored the McKinsey Award–winning HBR article “ Accounting for Climate Change ” (November–December 2021).
• Anette Mikes is a fellow at Hertford College, Oxford University, and an associate professor at Oxford’s Saïd Business School.

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Explore the Levels of Change Management

The Costs and Risks of Poorly Managed Change

Tim Creasey

Updated: March 2, 2024

Published: January 19, 2022

When the people side of change is ignored or poorly managed, the project and the organization take on additional costs and risks. When you consider it from this perspective, effective change management is a cost avoidance technique, risk mitigation tactic, and justifiable investment . Here's an overview of common costs and risks, and how to position change management to clearly communicate and share its benefits.

Consequences of Poor Change Management

It's likely that we have all experienced a poorly managed organizational change at some point, either as an offender or victim. We know from experience that when this happens, the individual changes that culminate in organizational change do not take place. We know that when the "people side of change" is mismanaged, projects don't realize the results and outcomes desired. We know that we have a lower likelihood of meeting objectives, finishing on time, and finishing on budget . And we know that speed of adoption will be slower, ultimate utilization will be lower, and proficiency will be lacking—all dragging down expected returns. 

Ignoring or mismanaging change manifests as costs and risks that play out on both the project level and organizational level. While some of these costs and risks may seem soft, many are quantifiable and can have a significant impact on financial performance for the project and the organization as a whole. 

Project-level costs and risks of mismanaged change

Project-level impacts relate directly to the specific project or initiative forgoing change management. These projects can impact tools, technologies, processes, reporting structures and job roles. They can result from strategic planning, internal stimuli such as performance issues, external stimuli such as regulation or competitive threats, or demands by customers and suppliers. The initiatives may be formalized as projects with project managers, budgets, schedules, etc., or they may be informal in nature but still impact how people do their jobs. 

While these projects can take on a number of different forms, the fact remains that ignoring or mismanaging the people side of change has real consequences for project performance:

• Project delays
• Missed milestones
• Budget overruns
• Rework required on design
• Loss of work by project team
• Resistance 
• Project put on hold
• Resources not made available
• Obstacles appear unexpectedly
• Project fails to deliver results
• Project is fully abandoned

When we apply change management effectively , we can prevent or avoid costs and mitigate risks tied to how individual employees adopt and utilize a change.

Organization-level costs and risks of mismanaged change

The organizational level is a step above the project-level impacts. These costs and risks are felt not only by the project team, but by the organization as a whole. Many of these impacts extend well beyond the lifecycle of a given project. When valuable employees leave the organization, the costs are extreme. A legacy of failed change presents a significant and ever-present backdrop that all future changes will encounter.

The organizational costs and risks of poorly managing change include:

• Productivity plunges (deep and sustained)
• Loss of valued employees
• Reduced quality of work
• Impact on customers
• Impact on suppliers
• Decline in morale
• Legacy of failed change
• Stress, confusion and fatigue
• Change saturation

Applying change management effectively on a particular project or initiative allows you to avoid organizational costs and risks that last well beyond the life of the project.

Costs and risks of failing to deliver results and outcomes

There is one final dimension of costs and risks to consider, beyond the project and organizational impacts. When we try to introduce a change without using effective change management, we are much less likely to implement the change and fully realize the expected results and outcomes. This final dimension provides answers to the question: What if the change is not fully implemented?

If the change does not deliver the results and outcomes—in large part because we ignored the people side of change —there are additional costs and risks.

Costs if the change is not fully implemented:

• Lost investment made in the project
• Lost opportunity to have invested in other projects

Risks if the change is not fully implemented:

• Expenses not reduced
• Efficiencies not gained
• Revenue not increased
• Market share not captured
• Waste not reduced
• Regulations not met

Change Risks and Change Management

Discussing the costs and risks of poorly managed change is yet another way to make the case for change management . Positioning change management as a cost avoidance technique or a risk mitigation tactic can be an effective approach for communicating change management's value or to get support for the resources you need for managing the people side of change.

Tim Creasey is Prosci’s Chief Innovation Officer and a globally recognized leader in Change Management. Their work forms the basis of the world's largest body of knowledge on managing the people side of change to deliver organizational results.

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ITIL Change Management Risk Assessment

There is always a risk when organizations are implementing changes to their IT systems and infrastructure. 

Business leaders and IT team are anxious about that risks because if something goes wrong it may cause technical and financial loss. 

This is why risk assessment is an essential component of ITIL change management. 

In this blog post, we will explore the process of risk assessment in ITIL change management, including how to identify, evaluate, and mitigate potential risks, as well as the importance of communication and documentation. 

Let’s read on 

What is ITIL change management risk assessment?

ITIL (Information Technology Infrastructure Library) change management is a process that organizations follow to control and manage changes to their IT systems and infrastructure. The goal of ITIL change management is to minimize the negative impact of changes on business operations, while also ensuring that changes are properly planned, tested, and implemented.

ITIL change management process also includes a risk assessment process to identify and evaluate the potential risks associated with a change. This process helps organizations determine the likelihood and impact of potential risks, and take appropriate actions to mitigate or control those risks.

Why it is important to do risk assessment in ITIL change management?

Before making ITIL change request and going for formal ITIL change approval , assessment of risk are crucial for successful implementation of ITIL change.

By performing a thorough risk assessment before implementing a change, organizations can identify any potential issues and take steps to minimize or eliminate them. This can include developing mitigation strategies, such as creating backups or testing changes in a controlled environment, or implementing control measures, such as additional monitoring or user training.

Furthermore, risk assessment helps organizations prioritize the changes that need to be made based on the level of risk they pose. This enables the organization to focus on the changes that are most critical to the business, while managing the risks associated with them.

Moreover, Risk assessment is an ongoing process and should be regularly reviewed and updated as the organization’s environment and objectives change.

Overall, risk assessment in ITIL change management is critical for ensuring the stability and reliability of an organization’s IT systems, and for minimizing the potential negative impact of changes on business operations.

ITIL Change Management Risk Assessment Process 

Risk assessment process involves mainly three steps: Identification of potential risks; evaluating the likelihood and impact of identified risks and prioritization of risks based on likelihood and impact. But here it is also relevant to discuss development of mitigation strategies and their implementation and most importantly how to communicate risks to all stakeholders. 

Let’s discuss each of these 

1. Identification of potential risks

The identification of potential risks involves identifying and listing all the possible risks that could arise as a result of the proposed change.

There are several methods that can be used to identify potential risks, including:

Brainstorming: A group of individuals with relevant knowledge and experience come together to identify potential risks.

Checklists: Standardized checklists are used to identify potential risks based on past experience or industry best practices.

Root cause analysis: This method looks at the underlying causes of past incidents or problems to identify potential risks.

SWOT analysis: This method looks at the organization’s strengths, weaknesses, opportunities, and threats to identify potential risks.

Impact analysis: This method looks at the potential impact of a change on different areas of the organization, such as operations, security, or compliance, to identify potential risks.

During the identification of potential risks, it is important to consider the different types of risks that may arise, such as technical risks, operational risks, and compliance risks.

It is also important to involve individuals from different departments and with different levels of knowledge and experience in the identification process to ensure that a wide range of potential risks are considered.

2. Evaluating the likelihood and impact of identified risks

Once potential risks are identified, the next step is to evaluate the likelihood and impact of those risks, in order to prioritize them and develop appropriate mitigation and control measures.

This step involves determining the probability of each identified risk occurring, as well as the potential impact on the organization if the risk were to occur.

To evaluate the likelihood of a risk occurring, organizations can use techniques such as:

Probability estimates: Assigning a numerical value to the likelihood of a risk occurring, such as “low”, “medium”, or “high”.

Scenario analysis: Identifying possible scenarios that could lead to the risk occurring and assessing the likelihood of each scenario.

To evaluate the impact of a risk, organizations can consider factors such as:

Financial impact: The potential costs associated with the risk, such as lost revenue or increased expenses.

Operational impact: The potential disruption to business operations, such as service outages or delays.

Compliance impact: The potential impact on compliance with laws, regulations, or industry standards.

Reputational impact: The potential impact on the organization’s reputation or brand.

3. Prioritization of risks based on likelihood and impact  

Prioritizing risks based on likelihood involves determining the priority of each identified risk based on the level of risk they pose to the organization.

The most common method of risk prioritization is to create a risk matrix, where the likelihood of a risk occurring is plotted against its potential impact. Risks that fall in the high likelihood and high impact quadrant should be given the highest priority, as they pose the greatest risk to the organization. Risks that fall in the low likelihood and low impact quadrant can be given lower priority.

Another way to prioritize risks is by using a scoring system, where a score is assigned to each risk based on its likelihood and impact. Risks with higher scores would be considered higher priority.

Additionally, organizations can also use other factors such as the urgency of the change and the risk tolerance of the organization to prioritize risks.

4. Development of strategies to mitigate or control identified risks

After identifying and prioritizing potential risks in the ITIL change management process, the next step is to develop strategies to mitigate or control those risks.

Mitigation strategies aim to reduce the likelihood or impact of a risk, while control strategies aim to manage the risk if it does occur.

Here are a few examples of mitigation and control strategies that organizations can use to manage risks:

Creating backups: This can help ensure that data can be restored in the event of a risk occurring.

Testing changes in a controlled environment: This can help identify and resolve any issues before the change is implemented in a production environment.

Implementing redundancy: This can help ensure that critical systems or services can continue to function in the event of a risk occurring.

Implementing additional monitoring: This can help detect and respond to risks more quickly.

Developing incident response plans: This can help organizations respond quickly and effectively to risks that do occur.

Providing user training: This can help ensure that users know how to use systems or services in the event of a change.

The development of mitigation and control strategies should involve individuals from different departments, such as IT, operations, and business, to ensure that a wide range of perspectives and expertise are considered.

Once the strategies are developed, they should be implemented, and regularly reviewed and updated to ensure that they are still effective in managing the risks.

5. Implementation of these strategies

Implementing the strategies is about taking the necessary steps to put the strategies into action and make them operational. This includes:

Assigning responsibilities and tasks: Identifying and assigning the people, departments, or teams responsible for implementing the strategies.

Allocating resources: Identifying and allocating the necessary resources, such as budget and personnel, to implement the strategies.

Developing and communicating procedures: Developing and communicating procedures and guidelines for implementing the strategies, to ensure that they are implemented consistently and correctly.

It’s important to note that the implementation process should be closely coordinated with the change management process, to ensure that the change is implemented correctly and that the strategies are in place before the change is made.

6. Communication of risk assessment findings to relevant stakeholders

Communication of risk assessment ensures that all stakeholders are aware of the risks associated with a change and are able to take appropriate actions to manage those risks.

The communication process typically involves:

Identifying stakeholders: Identifying all stakeholders who may be impacted by the risks associated with the change, including individuals or departments within the organization, as well as external stakeholders such as customers or partners.

Communicating the findings: Communicating the findings of the risk assessment process, including the identified risks, their likelihood and impact, and the control measures that have been implemented to manage those risks.

Providing regular updates : Providing regular updates on the status of the risk management process, including any new risks that have been identified or any changes to the control measures.

Encouraging feedback : Encouraging feedback from stakeholders on the risk assessment process and the control measures implemented, to ensure that the process is effective and that all stakeholders are aware of the risks and the measures taken to manage them.

Communicating the outcome of the change: Communicating the outcome of the change, including any issues that arose, and the actions taken to address them.

Effective communication of risk assessment findings to relevant stakeholders helps build trust and understanding, and allows stakeholders to plan and prepare for potential risks.

Final Words 

By performing a thorough risk assessment before implementing a change, organizations can identify bottlenecks and threats to implementation of IT related changes. The findings of risk assessment contribute to developing of mitigation strategies to overcome the potential risks of implementing changes in IT system and infrastructure. Therefore, organizational stability and reliability of its IT system largely depends on how effectively risk assessment is undertaken.

About The Author

Tahir Abbas

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Updated: 19 March 2024 Contributors: Alexandria Iacoviello, Amanda Downie

Change management (CM) is the method by which an organization communicates and implements change. This includes a structured approach to managing people and processes through organizational change.

A change management process helps ensure that employees are equipped and supported for the entirety of the transition. Several reasons constitute a need for change management. Mergers and acquisitions, leadership adjustments and implementation of new technology are common change management drivers. The organizational development needed to compete with rapid digital transformation across the industry leads companies to implement new products and new processes. However, these innovations often disrupt workflows, presenting a need for effective change management.

Successful transformational change goes beyond a communication plan; it involves implementing change throughout the company culture. A change management strategy can help stakeholders to adopt proposed changes more readily than in situations where such a strategy is not employed. By activating employees as change agents by involving them in the workflow, business milestones can be achieved. Leaders can and should establish the benefits of change through developing a comprehensive change management plan.

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Change management should be a thought-out, structured plan that remains adaptable to potential improvements. How change leaders choose to approach organizational change management varies in size, need and potential for employee buy-in.

For example, employees who lack change efforts experience may need a more tailored approach, like receiving guidance from human resources  (HR). Employees who experience change on an organizational level may serve as good candidates on the change management team, offering insightful support to leadership and fellow employees.

Successful change management is a cumulative result of all the key stakeholders’ success in understanding the change initiatives. This requires proactively engaging and supporting a positive employee experience —invite employees to give constructive feedback and continuously communicate the business process or scope changes.

Psychologists and change leaders have developed several methods of organizational change management:

Developed by change consultant William Bridges  (link resides outside ibm.com), this framework focuses on people’s reactions to change. The adjustment of critical stakeholders to change is often compared to the five stages of grief, but instead, the Bridges’ model is described through three stages:

• Endings: The discontinuation of old processes.
• Neutral zone: The uncertainty and confusion as new roles are being identified.
• New beginnings: The acceptance of new ways.

Owned by a joint venture between Capita and the UK Cabinet Office, Axelos developed the IT Infrastructure Library (ITIL) . The framework uses a detailed guide to manage IT operations and infrastructure. The goal is to drive successful digital transformation through incident-free IT service implementation throughout the change management process.

Over the years, ITIL was improved and expanded upon to enhance the change process. The ITIL framework has four versions, with the latest being ITIL v4. This version prioritizes the implementation of proper DevOps , automation and other essential IT processes. 1  Created to aid in modern-day digital transformation, the Fourth Industrial Revolution prompted ITIL v4.

John Kotter, a Harvard professor, created his process for professionals that are tasked with leading change. 2  He collected the common success factors of numerous change leaders and used them to develop an eight-step process:

• Creating a sense of urgency for change.
• Building a guiding coalition.
• Forming a strategic vision and initiatives.
• Enlisting a volunteer army.
• Enabling action by removing barriers.
• Generating short-term wins.
• Sustaining acceleration.
• Instituting change.

Psychologist Kurt Lewin developed the "unfreeze-change-refreeze" framework during the 1940s. 3  The metaphor implies that the shape of an ice block remains unaltered until it shatters. However, transforming an ice block without breaking it can be done by melting the ice, pouring the water into a new mold and freezing it in the new shape. Lewin drew this comparison for change management strategy, indicating that introducing change in stages can help an organization successfully attain employee buy-in and a smoother change process.

In the late 1970s, McKinsey consultants Thomas J. Peters and Robert H. Waterman wrote a book called In Search of Excellence . 4 In that book, a framework was introduced through its ability to map out interrelated factors that can influence the ability of an organization to change. Around 30 years later, this framework became the McKinsey 7-S Framework. The intersection of the elements within the framework differs depending on the culture or institution. Listed in no hierarchical order, those seven elements are:

• Shared values

The Prosci Methodology, developed by the firm Prosci, is based on various studies that examine how people react to change. The methodology comprises three main components: the Prosci Change Triangle (PCT), the ADKAR model and the Prosci 3-Phase Process.

Sponsorship, project management and change management drive the PCT Model framework. This model puts success at the center of these three elements and is used in the overall Prosci Methodology.

ADKAR Model

The ADKAR model addresses one of the most essential change management pieces: the stakeholders. The framework is an acronym that equips change leaders with the right strategies:

• Awareness of the need for change.
• Desire to participate and support the change.
• Knowledge of how to change.
• Ability to implement desired skills and behaviors.
• Reinforcement to sustain change.

The Prosci 3-Phase Process

A 3-phase process that has a structured but flexible framework. The three phases of the Prosci Methodology are to prepare an approach, manage change and sustain outcomes. 5

Stakeholders can vary depending on the size of the organization and the nature of change. For example, if you are changing a process that directly impacts a product you offer clients, then your clients are essential stakeholders. Whereas if you are changing an internal technology tool, your clients might not be critical stakeholders.

To determine the stakeholders necessary for your change management strategy, define the scope of change first. Next, determine who consistently uses and operates these current processes. Begin by engaging those stakeholders; as you go, it may be determined that there are more key stakeholders to consider. As discussed, it is important to be flexible with adjusting your change management process. Additional stakeholders may need to be included in the change management strategy at different stages.

Common stakeholders in change management are typically executives and leadership, middle managers, front-line employees, developers, project managers, Subject Matter Experts (SMEs) and potentially, clients. To identify the stakeholders involved in change management, consider asking these questions:

• Who leads the business unit undergoing change?
• Who owns the process undergoing change?
• Who are the people sponsoring change?
• Who are the people executing change?
• Who are the people most affected day-to-day by the change?

With the advent of rapid digital transformation and continual innovation, change management is a crucial tool for organizations to succeed. Among the various methodologies of change management are some best practices to consider:

• Clearly define the vision and make goals measurable.
• Ensure employee buy-in is as important as executive sponsorship.
• Be willing to adjust your process, especially if it is not driving the coveted outcomes.
• Engage employees in decision-making when necessary.
• Collaborate with project management on the automation of processes.
• Create your change management plan based on organizational risk tolerance.

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1 ITIL Definition  (link resides outside ibm.com), Tech Target

2 Definition  (link resides outside ibm.com), Kotter Inc.

3 Kurt Lewins Change Management  (link resides outside ibm.com), Tech Target

4 7-S Framework  (link resides outside ibm.com), McKinsey, 2008

5 Methodology Overview  (link resides outside ibm.com), Prosci

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What Is Risk Management & Why Is It Important?

• 24 Oct 2023

Businesses can’t operate without risk. Economic, technological, environmental, and competitive factors introduce obstacles that companies must not only manage but overcome.

According to PwC’s Global Risk Survey , organizations that embrace strategic risk management are five times more likely to deliver stakeholder confidence and better business outcomes and two times more likely to expect faster revenue growth.

If you want to enhance your job performance and identify and mitigate risk more effectively, here’s a breakdown of what risk management is and why it’s important.

Access your free e-book today.

What Is Risk Management?

Risk management is the systematic process of identifying, assessing, and mitigating threats or uncertainties that can affect your organization. It involves analyzing risks’ likelihood and impact, developing strategies to minimize harm, and monitoring measures’ effectiveness.

“Competing successfully in any industry involves some level of risk,” says Harvard Business School Professor Robert Simons, who teaches the online course Strategy Execution . “But high-performing businesses with high-pressure cultures are especially vulnerable. As a manager, you need to know how and why these risks arise and how to avoid them.”

According to Strategy Execution , strategic risk has three main causes:

• Pressures due to growth: This is often caused by an accelerated rate of expansion that makes staffing or industry knowledge gaps more harmful to your business.
• Pressures due to culture: While entrepreneurial risk-taking can come with rewards, executive resistance and internal competition can cause problems.
• Pressures due to information management: Since information is key to effective leadership , gaps in performance measures can result in decentralized decision-making.

These pressures can lead to several types of risk that you must manage or mitigate to avoid reputational, financial, or strategic failures. However, risks aren’t always obvious.

“I think one of the challenges firms face is the ability to properly identify their risks,” says HBS Professor Eugene Soltes in Strategy Execution .

Therefore, it’s crucial to pinpoint unexpected events or conditions that could significantly impede your organization’s business strategy .

Related: Business Strategy vs. Strategy Execution: Which Course Is Right for Me?

According to Strategy Execution , strategic risk comprises:

• Operations risk: This occurs when internal operational errors interrupt your products or services’ flow. For example, shipping tainted products can negatively affect food distribution companies.
• Asset impairment risk: When your company’s assets lose a significant portion of their current value because of a decreased likelihood of receiving future cash flows . For instance, losing property assets, like a manufacturing plant, due to a natural disaster.
• Competitive risk: Changes in the competitive environment can interrupt your organization’s ability to create value and differentiate its offerings—eventually leading to a significant loss in revenue.
• Franchise risk: When your organization’s value erodes because stakeholders lose confidence in its objectives. This primarily results from failing to control any of the strategic risk sources listed above.

Understanding these risks is essential to ensuring your organization’s long-term success. Here’s a deeper dive into why risk management is important.

4 Reasons Why Risk Management Is Important

1. protects organization’s reputation.

In many cases, effective risk management proactively protects your organization from incidents that can affect its reputation.

“Franchise risk is a concern for all businesses,“ Simons says in Strategy Execution . “However, it's especially pressing for businesses whose reputations depend on the trust of key constituents.”

For example, airlines are particularly susceptible to franchise risk because of unforeseen events, such as flight delays and cancellations caused by weather or mechanical failure. While such incidents are considered operational risks, they can be incredibly damaging.

In 2016, Delta Airlines experienced a national computer outage, resulting in over 2,000 flight cancellations. Delta not only lost an estimated $150 million but took a hit to its reputation as a reliable airline that prided itself on “canceling cancellations.”

While Delta bounced back, the incident illustrates how mitigating operational errors can make or break your organization.

2. Minimizes Losses

Most businesses create risk management teams to avoid major financial losses. Yet, various risks can still impact their bottom lines.

A Vault Platform study found that dealing with workplace misconduct cost U.S. businesses over $20 billion in 2021. In addition, Soltes says in Strategy Execution that corporate fines for misconduct have risen 40-fold in the U.S. over the last 20 years.

One way to mitigate financial losses related to employee misconduct is by implementing internal controls. According to Strategy Execution , internal controls are the policies and procedures designed to ensure reliable accounting information and safeguard company assets.

“Managers use internal controls to limit the opportunities employees have to expose the business to risk,” Simons says in the course.

One company that could have benefited from implementing internal controls is Volkswagen (VW). In 2015, VW whistle-blowers revealed that the company’s engineers deliberately manipulated diesel vehicles’ emissions data to make them appear more environmentally friendly.

This led to severe consequences, including regulatory penalties, expensive vehicle recalls, and legal settlements—all of which resulted in significant financial losses. By 2018, U.S. authorities had extracted $25 billion in fines, penalties, civil damages, and restitution from the company.

Had VW maintained more rigorous internal controls to ensure transparency, compliance, and proper oversight of its engineering practices, perhaps it could have detected—or even averted—the situation.

Related: What Are Business Ethics & Why Are They Important?

3. Encourages Innovation and Growth

Risk management isn’t just about avoiding negative outcomes. It can also be the catalyst that drives your organization’s innovation and growth.

“Risks may not be pleasant to think about, but they’re inevitable if you want to push your business to innovate and remain competitive,” Simons says in Strategy Execution .

According to PwC , 83 percent of companies’ business strategies focus on growth, despite risks and mixed economic signals. In Strategy Execution , Simons notes that competitive risk is a challenge you must constantly monitor and address.

“Any firm operating in a competitive market must focus its attention on changes in the external environment that could impair its ability to create value for its customers,” Simons says.

This requires incorporating boundary systems —explicit statements that define and communicate risks to avoid—to ensure internal controls don’t extinguish innovation.

“Boundary systems are essential levers in businesses to give people freedom,” Simons says. “In such circumstances, you don’t want to stifle innovation or entrepreneurial behavior by telling people how to do their jobs. And if you want to remain competitive, you’ll need to innovate and adapt.”

Netflix is an example of how risk management can inspire innovation. In the early 2000s, the company was primarily known for its DVD-by-mail rental service. With growing competition from video rental stores, Netflix went against the grain and introduced its streaming service. This changed the market, resulting in a booming industry nearly a decade later.

Netflix’s innovation didn’t stop there. Once the steaming services market became highly competitive, the company shifted once again to gain a competitive edge. It ventured into producing original content, which ultimately helped differentiate its platform and attract additional subscribers.

By offering more freedom within internal controls, you can encourage innovation and constant growth.

4. Enhances Decision-Making

Risk management also provides a structured framework for decision-making. This can be beneficial if your business is inclined toward risks that are difficult to manage.

By pulling data from existing control systems to develop hypothetical scenarios, you can discuss and debate strategies’ efficacy before executing them.

“Interactive control systems are the formal information systems managers use to personally involve themselves in the decision activities of subordinates,” Simons says in Strategy Execution . “Decision activities that relate to and impact strategic uncertainties.”

JPMorgan Chase, one of the most prominent financial institutions in the world, is particularly susceptible to cyber risks because it compiles vast amounts of sensitive customer data . According to PwC , cybersecurity is the number one business risk on managers’ minds, with 78 percent worried about more frequent or broader cyber attacks.

Using data science techniques like machine learning algorithms enables JPMorgan Chase’s leadership not only to detect and prevent cyber attacks but address and mitigate risk.

Start Managing Your Organization's Risk

Risk management is essential to business. While some risk is inevitable, your ability to identify and mitigate it can benefit your organization.

But you can’t plan for everything. According to the Harvard Business Review , some risks are so remote that no one could have imagined them. Some result from a perfect storm of incidents, while others materialize rapidly and on enormous scales.

By taking an online strategy course , you can build the knowledge and skills to identify strategic risks and ensure they don’t undermine your business. For example, through an interactive learning experience, Strategy Execution enables you to draw insights from real-world business examples and better understand how to approach risk management.

Do you want to mitigate your organization’s risks? Explore Strategy Execution —one of our online strategy courses —and download our free strategy e-book to gain the insights to build a successful strategy.

About the Author

ITIL Change Management Risk Assessment Matrix

January 10, 2024

The Information Technology Infrastructure Library (ITIL) Change Management Risk Assessment Matrix is essential in managing the potential risks associated with IT changes across world markets. As technology evolves rapidly, businesses must proactively develop effective risk management strategies to ensure system stability, integrity, and long-term growth.

This article provides an in-depth look at the components and implementation strategies of the ITIL Change Management Risk Assessment Matrix, as well as data-driven insights into its benefits and applications. With this knowledge, organizations can create robust risk management strategies to mitigate the risks associated with IT changes and improve their performance, productivity, and bottom line.

Additionally, organizations can leverage the ITIL Change Management Risk Assessment Matrix to make more informed decisions, ensuring that changes are both necessary and beneficial.

Definition of ITIL Change Management

The ITIL Change Management framework utilizes a Risk Assessment Matrix as a pivotal tool for gauging the potential risks associated with IT changes.

This matrix offers a comprehensive analysis of the likelihood and impact of each identified risk, thereby aiding in prioritizing and managing them effectively.

Organizations can mitigate possible threats through this systematic approach and enhance their decision-making process, contributing to a more controlled and efficient IT environment.

Overview of Risk Assessment Matrix

Understanding the Risk Assessment Matrix is crucial in ITIL Change Management as it provides a structured approach for assessing risks associated with changes, enabling more informed decision-making.

The ITIL Change Management Risk Assessment Matrix is a tool used in project management risk management to identify and evaluate potential risks.

The matrix facilitates risk analysis by visualizing the level of risk based on the likelihood of occurrence and the potential impact.

This management risk assessment approach aids in prioritising risks and developing effective management risk mitigation strategies .

In project change management risk analysis , the matrix serves as a handy guide for managers to assess and manage the uncertainties and challenges that may arise, thereby reducing risks in project management .

Benefits of a Risk Assessment Matrix

Implementing a Risk Assessment Matrix in ITIL Change Management presents numerous advantages.

These include improved change processes, enhanced communication and collaboration, increased visibility and awareness, and reduced error rates.

By systematically evaluating potential risks and their impacts, the matrix fosters a more streamlined and effective change process.

This minimizes service disruption and optimizes resource allocation.

Furthermore, it facilitates team communication and collaboration, promotes transparency and awareness of potential risks, and reduces error rates.

This ensures a more robust and resilient IT infrastructure.

Improved Change Processes

Adopting an ITIL change management risk assessment matrix often improves change processes by systematically assessing and mitigating potential risks .

Enhanced change processes ensure a more streamlined ITIL change management process flow, using a management risk assessment template and a project risk analysis and management toolkit.

The ITIL change management risk assessment matrix facilitates identifying, analysing, and evaluating potential risks, thereby aiding in formulating sound risk mitigation strategies.

The deployment of a software tool for risk management and a management risk assessment questionnaire further enhances the effectiveness of this process.

The ITIL change management implementation benefits, such as reduced system downtime and improved service quality, are achieved using this systematic risk management approach.

Enhanced Communication and Collaboration

Effective coordination and open communication channels are pivotal in ensuring smooth operational processes within an organization.

Enhanced communication and collaboration are integral to ITIL change management risk assessment, as they ensure that all stakeholders are privy to the potential project risks and are prepared to handle them.

The management team’s timely communication of risk assessment and the use of the ITIL change management process flow can significantly reduce management risks.

ITIL change management practices encourage a holistic approach, ensuring all management activities, including user training, are comprehensively addressed.

The management risks review guide aids in effective decision-making, further enhancing the process.

Hence, the augmentation of communication and collaboration in ITIL change management risk assessment promises more efficient, transparent, and successful change initiatives.

Increased Visibility and Awareness

Incorporating robust visibility and awareness measures can significantly enhance operational efficiency within an organization. This can be achieved using tools such as the ITIL change management matrix icon and the ITIL change management process flow diagram.

These tools visually represent the management risk management processes , facilitating increased visibility and awareness.

The risk level records and survey further contribute to this visibility by providing quantifiable data on potential risks. The advisory board can utilize the management risk matrix chart for enhanced decision-making.

Implementing the ITIL change management in PowerPoint and adhering to the ITIL change management implementation checklist ensures a systematic progression of the change management process, further boosting operational efficiency.

Reduced Error Rates

Transitioning from the enhanced visibility and awareness that the ITIL change management risk assessment matrix offers, one cannot overlook the significant reduction in error rates it brings to any management project.

The matrix, an integral part of the systematic change management process, allows the project management team to conduct a thorough impact analysis, thereby identifying and mitigating management risks before they escalate.

• It enhances accuracy in the operational change management program, reducing costly mistakes.
• The risk matrix provides a management risks template , effectively reducing error rates.
• It ensures the implementation of technological changes is flawless, resulting in fewer errors.
• The ITIL change management process flow guarantees a thorough, mistake-proof process.
• As part of the matrix, adequate project management tools help in error detection and prevention.

In essence, the ITIL change management risk assessment matrix significantly boosts the effectiveness of the change management process , primarily by reducing error rates.

Components of a Risk Assessment Matrix

A comprehensive analysis of the components of a Risk Assessment Matrix necessitates an in-depth examination of the identification of risks and impacts. This involves identifying potential risks and their impacts on a project or organization.

The next component is determining the severity levels of the identified risks and impacts. This involves assessing the potential consequences of each risk and impact and assigning severity levels based on their potential impact on the project or organization.

Another important component is prioritising change requests based on these risk and impact levels. This involves evaluating and ranking change requests based on the severity of the associated risks and impacts.

An integral part of this process is establishing criteria for making change decisions. This criterion is informed by the factors mentioned above, such as the severity levels of risks and impacts.

This exploration will provide valuable insights into the systematic nature of risk management , highlighting the importance of a structured approach in understanding and mitigating potential adverse effects.

Identification of Risks and Impacts

Identifying risks and impacts in the ITIL change management process requires a comprehensive understanding of the potential barriers and challenges that may hinder the successful implementation of proposed changes.

This includes a thorough project management assessment of each risk’s potential impact and its place in the impact quadrant.

The risk change management process involves identifying the potential risks affecting the ITIL change management process flow.

Identification in project management involves discerning which risks have the highest potential impact and prioritizing them accordingly.

Management initiative is crucial in developing strategies to mitigate these risks.

An alternative plan should be prepared in case of unforeseen circumstances or if the identified risks materialize .

Project change management risk assessment is key to maintaining control over the project and ensuring its completion.

Severity Level of the Risks & Impacts Identified

Understanding the severity level of the potential impacts and risks is essential in the ITIL change management process. It provides valuable insight into the extent of potential damage and enables the development of robust mitigation strategies.

Assessing severity involves examining the potential negative impacts of a failure on users and the management objectives. This data-driven approach allows for effective management of risks and facilitates the creation of an alternate change management risk strategy if required.

Various levels of severity, from minor to critical, are usually considered in the management program to account for all possible scenarios. Such a comprehensive assessment promotes clear and concise decision-making.

Ensuring that every request is handled efficiently minimizes potential disruptions and contributes to the overall success of the change management process .

Prioritization of Change Requests Based on Risk & Impact Levels

Evaluating and prioritizing requests for alterations in the system based on the potential risks and impacts is a pivotal part of the process, ensuring that urgent and high-risk issues are addressed first.

This is a core component of the ITIL change management workflow, the broader service transition, and the ITIL change management framework.

The change request is analyzed through a simple change management risk assessment.

A comprehensive analysis change management process is undertaken to identify potential hazards .

Questions about risk management are considered to mitigate threats .

The overview of change management and the ITIL change management process flow help to streamline this process.

Finally, technology change management tools can prioritise change requests based on risk & impact levels.

Criteria for Making Decisions on Changes

Determining the most appropriate course of action regarding system alterations requires careful consideration of several critical factors. The change advisory board is vital in evaluating approval requests for changes based on their risk of failure, alignment with business goals and plans, and potential impact on service delivery.

Decisions are then made based on these evaluations, and control measures are implemented .

How to Implement an ITIL Change Management Risk Assessment Matrix

Implementation of an ITIL Change Management Risk Assessment Matrix necessitates a comprehensive approach. This approach involves defining the scope and establishing guidelines for assessing risks and impacts.

The first step in implementing the matrix is to define the scope. This process is essential in identifying the key areas to be covered in the risk assessment. The scope can include IT systems, processes, and infrastructure. By clearly defining the scope, organizations can ensure that all relevant areas are considered during the risk assessment .

Once the scope is defined, the next step is establishing clear and concise guidelines for assessing risks and impacts. These guidelines are crucial for effectively quantifying risks and determining potential impacts on IT services and operations. Organizations can ensure consistency and accuracy in their risk assessment process by having well-defined guidelines.

Implementing an ITIL Change Management Risk Assessment Matrix requires a systematic and structured approach. Defining the scope and establishing guidelines are key components of this approach and provide a robust framework for effective risk management.

Defining the Scope

In ITIL change management, defining the scope is a critical step that involves identifying the specific areas affected by the proposed change, including systems, processes, and resources. This process is vital as it is integral to the overall management guide.

Communication :

• This aspect involves the effective dissemination of information regarding the proposed change to all relevant stakeholders, ensuring that everyone is on board and understands the implications of the change.

Control strategies :

• These include the use of a software tool for doing risk management in project management, as well as the step-by-step procedures for risk management, such as the ITIL checklist request for change (RFC) and the activation of an emergency change advisory board.

This process is crucial in maintaining control over operations during project management .

Establishing Guidelines for Assessing Risks & Impacts

Having defined the scope of the ITIL change management risk assessment matrix, it is crucial to establish guidelines for assessing risks and impacts. This step is instrumental in a service management practice as it aids in determining the potential effects of a service outage or other disruptions to the product.

Proper assessment involves evaluating the possible impacts of a change request form, from minor tweaks to substantial organizational change management program shifts. The change advisory board oversees these processes and must consider all possible outcomes, including potential outages and the need for backout plans.

Furthermore, management examples and a benefits realisation plan can provide a blueprint for managing the impacts. Hence, establishing risk assessment guidelines is crucial for effective change management.

Frequently Asked Questions

What are the potential challenges in implementing an itil change management risk assessment matrix.

Implementing an ITIL change management risk assessment matrix can face challenges such as resistance to change, lack of expertise, resource allocation issues, and complexities in integrating existing processes.

Are any certifications or training programs available for ITIL Change Management Risk Assessment Matrix?

Yes, ITIL Change Management offers numerous certifications and training programs, including a risk assessment matrix . These include Axelos’ ITIL Foundation and Practitioner levels and various offerings from professional training providers.

How much does implementing an ITIL Change Management Risk Assessment Matrix cost in a medium-sized organization cost?

Costs for implementing an ITIL change management risk assessment matrix in a medium-sized organization can vary significantly. They depend on factors such as the complexity of the business processes, available resources, and desired level of customization.

What are some real-life examples of companies successfully using the ITIL Change Management Risk Assessment Matrix?

Renowned corporations such as IBM, Microsoft, and HSBC have effectively utilized the ITIL Change Management Risk Assessment Matrix to improve their change management processes and reduce potential business risks .

How often should an ITIL Change Management Risk Assessment Matrix be updated or reviewed?

The frequency of updating an ITIL change management risk assessment matrix largely depends on the organization’s dynamics. However, best practices suggest a review and potential update at least once per quarter.

Implementing an ITIL Change Management Risk Assessment Matrix is paramount to organizations aiming to mitigate potential risks.

This matrix offers a structured approach to understanding and managing the potential impact of changes within the IT infrastructure.

The numerous benefits include improved decision-making, enhanced communication, and increased efficiency.

Therefore, integrating this matrix within ITIL Change Management processes should be considered a strategic priority.

Chris Ekai is a Risk Management expert with over 10 years of experience in the field. He has a Master’s(MSc) degree in Risk Management from University of Portsmouth and is a CPA and Finance professional. He currently works as a Content Manager at Risk Publishing, writing about Enterprise Risk Management, Business Continuity Management and Project Management.

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Where Do Models for Change Management, Improvement and Implementation Meet? A Systematic Review of the Applications of Change Management Models in Healthcare

Reema harrison.

1 School of Population Health, University of New South Wales, Sydney, NSW, Australia

Sarah Fischer

2 Clinical Excellence Commission, New South Wales Health, Sydney, NSW, Australia

3 School of Psychology, Deakin University, Melbourne, VIC, Australia

Ramesh L Walpola

Ashfaq chauhan, temitope babalola, stephen mears.

4 Hunter New England Medical Library, New Lambton, NSW, Australia

Huong Le-Dao

The increasing prioritisation of healthcare quality across the six domains of efficiency, safety, patient-centredness, effectiveness, timeliness and accessibility has given rise to accelerated change both in the uptake of initiatives and the realisation of their outcomes to meet external targets. Whilst a multitude of change management methodologies exist, their application in complex healthcare contexts remains unclear. Our review sought to establish the methodologies applied, and the nature and effectiveness of their application in the context of healthcare.

A systematic review and narrative synthesis was undertaken. Two reviewers independently screened the titles and abstracts followed by the full-text articles that were potentially relevant against the inclusion criteria. An appraisal of methodological and reporting quality of the included studies was also conducted by two further reviewers.

Thirty-eight studies were included that reported the use of 12 change management methodologies in healthcare contexts across 10 countries. The most commonly applied methodologies were Kotter’s Model (19 studies) and Lewin’s Model (11 studies). Change management methodologies were applied in projects at local ward or unit level (14), institutional level (12) and system or multi-system (6) levels. The remainder of the studies provided commentary on the success of change efforts that had not utilised a change methodology with reference to change management approaches.

Change management methodologies were often used as guiding principle to underpin a change in complex healthcare contexts. The lack of prescription application of the change management methodologies was identified. Change management methodologies were valued for providing guiding principles for change that are well suited to enable methodologies to be applied in the context of complex and unique healthcare contexts, and to be used in synergy with implementation and improvement methodologies.

Introduction

The ability to adapt and change is critical to contemporary health service delivery in order to meet changing population needs, the demands of increasing life expectancy and complex health conditions. 1 Increasing prioritisation of healthcare quality across the six domains of efficiency, safety, patient-centredness, effectiveness, timeliness and accessibility has given rise to accelerated change, both in the uptake of initiatives and the realisation of their outcomes to meet external targets. 2 Contemporary health systems thrive on efficient models of care and effective resource utilisation. 3–5 Strategies implemented centrally and locally across health systems to enhance efficiency and patient-reported experiences and outcomes require individuals, teams and organisations to quickly adopt, integrate and renew their behaviours, activities and approach to service planning. 6 , 7 Likewise, achieving patient-centred care requires a revitalisation of the system as a whole, with holistic changes to ways of working to enable and integrate patient contributions, preferences, experiences and outcomes to inform care delivery. 8 , 9 Realisation of healthcare organisations as intelligent systems that consider even everyday clinical work as learning and improvement opportunities have further integrated continuous quality improvement as business as usual for healthcare. 10

With high volume, rapid change required as a central and enduring feature, the healthcare sector has recognised change management as a core competency for healthcare leaders and managers; reflected in professional registration requirements internationally. 1 Despite extensive education and training around change management to healthcare leadership and management, change efforts often fail, change fatigue is substantial and lack of sufficient change management cited as a critical cause of initiatives that fail. 11 Healthcare is now recognised as a complex adaptive system; the whole of the system as more than the sum of its parts and characterised by a large number of elements that interact dynamically, non-linear interactions, history that influences behaviour and poor boundary definition. 12 This recognition has led to growing interest in use of methodologies that promote the adoption of changes in health service delivery through iterative planning and practice cycles and subsequent scaling where considered successful. 13 A plethora of evidence is now available regarding approaches to identify and test change ideas, with a parallel literature regarding how to embed evidence-based successful change practices, including through promoting behaviour change amongst healthcare staff and patients. 14 , 15

In a departure from the notion of planned, top-down and controlled change processes, arguably there has been reduced interest in and the use of “change management” models in healthcare. 16 In understanding healthcare systems as complex adaptive systems, the multiple variables and influences within the system and their unpredictability and uncertainty must be recognised in trying to create and manage any change process. 17 Yet concepts that underpin change management continue to feature as central to successful change in healthcare, from the engagement of stakeholders towards a shared change vision and basis for change through to the progression of the change effort and its implementation. 18–20 Acknowledgement of the critical role of clinician and consumer engagement to create sustained change for quality improvement further supports the continued relevance of change management concepts of shared vision, stakeholder engagement and person-centred thinking. 21 Despite this, there has been limited exploration of the opportunities for change management concepts to support contemporary approaches to implementation and improvement methodologies. The Institute for Healthcare Improvement highlights that the Model for Improvement is not intended to replace change models but rather to accelerate improvement. When integrated with improvement and implementation methodologies, change management models may support increased clinician and patient engagement with change initiatives in healthcare and their success. The contemporary application of change management models in healthcare and their potential value towards enabling change in the context of a complex adaptive system remains unclear. 22 This knowledge provides the evidence base required for exploring opportunities to integrate change management with improvement and implementation methodologies.

A systematic review was completed to establish the evidence regarding defined change management models currently adopted in healthcare and the implications of their use to support implementation and improvement methodologies. In this review, change management models are defined as a structured overall process for change from the inception of change to benefits realisation. The evidence base identified through this review is critical to inform health systems about how change management models currently support healthcare change and to consider the opportunities to integrate change management models with improvement and implementation science methods.

The Preferred Reporting Items for Systematic Reviews (PRISMA) was used to guide the reporting of this review. 23

Eligibility Criteria

Inclusion criteria.

Primary data that demonstrated the application of an identified change management process, defined as a structured overall process for change from the inception of change to benefits realisation (eg, PROCSI, ADKAR, AIM), towards healthcare delivery published in English between 1 st January 2009–31 st August 2020 were included in the review. No restrictions were placed on the health system, service setting or the study design for inclusion in the review.

Exclusion Criteria

Publications discussing a hypothetical change as a result of a planned intervention were excluded. Additionally, non-primary sources such as editorials, opinion pieces or letters were excluded. Review articles were excluded but their reference lists searched to identify additional relevant material. The expansive literature utilising the Model for Improvement was not included in this review given the definition by the IHI as a model to accelerate improvement models rather than as a change model in itself. Furthermore, an aim of this review was to explore how change management models may support the use of improvement models such as the Model for Improvement.

Study Identification

Synonyms and relevant concepts were developed for these two major concepts being evaluated in this review of change management and healthcare delivery. A search strategy ( supplementary file 1 ) was developed and applied to the following electronic databases in June 2019, updated in August 2020: MEDLINE, PubMed, Scopus, and Web of Science. Results were merged using reference-management software (Endnote X9.2), duplicates were removed. The review process utilised the Covidence systematic review software (Veritas Health Innovation, Melbourne, Australia) for screening and extraction.

Study Selection and Data Extraction

Two reviewers (TB, RH) screened the titles and abstracts against the eligibility criteria. Full-text documents were obtained for all potentially relevant articles. The eligibility criteria were then applied to the articles by two reviewers (TB, RH). Two further reviewers conducted a face validity check on the final set of articles for inclusion (HLD, RW), with disagreements resolved via consultation. The following data were extracted from the included studies; author, date, study design, setting, sample, change management process/es and key findings.

Data Synthesis

A narrative empirical synthesis was undertaken in stages, based on the review objectives. 24 A quantitative analytic approach was not appropriate due to the heterogeneity of study designs, contexts, and types of literature included. Initial descriptions of eligible studies and results were tabulated ( Table 1 ). Common concepts were discussed between the review team members and patterns in the data explored to identify consistent findings in relation to the study objectives. In this process, interrogation of the findings explored relationships between study characteristics and their findings; the findings of different studies; and the influence of the use of different outcome measures, methods and settings on the resulting data. The literature was then subjected to a quality appraisal process before a narrative synthesis of the findings was produced.

Summary of Included Studies

Assessment of Study Quality

Due to heterogeneity of the study types selected, appraisal of methodological and reporting quality of the included studies and overall body of evidence was carried out using the revised version of the Quality Assessment for Diverse Studies tool (QuADS), which has demonstrated reliability and validity. 25 , 26 This tool awarded the score of 0–3 where 0 is the minimum score and 3 is the highest score against each of the 13 criterion. 26 Interrater reliability between two reviewers (RH, AC) revealed substantial agreement in the quality appraisal (k = 0.68). 27 , 28

Results of the Search

After duplicates were removed, 2012 papers were extracted from Endnote into Covidence. After title and abstract screening, 285 papers fulfilled the inclusion criteria and copies of full texts were obtained. Full-text screening led to a total of 38 papers included in the review. Figure 1 demonstrates the screening and selection process.

Flow chart of the study search and selection process.

Excluded Studies

The most common reasons for excluding papers at full-text review were because they did not discuss a formal change management method explicitly (144), were not in a healthcare setting, 16 were commentary, protocol or editorial pieces, 11 or were not in health service delivery. 6 Many studies alluded to common concepts or techniques identified in change management methodologies but were excluded if no explicit model or framework was utilised. The distinct and expansive literature employing the Model for Improvement as a methodology was excluded because, whilst the model intersects with change management methodologies, the focus is determining the nature of changes and adaptations to introduce through incremental introduction and analysis of changes rather than the process of managing the change. This body of work was therefore beyond the scope of the present review.

Characteristics of Included Studies

A total of 38 articles emerged; 35 were from OECD countries including the United States of America (18 studies), Canada (5 studies), Australia (4 studies), the United Kingdom (4 studies), Denmark (1 study), Ireland (1 study), Singapore (1 study) and Sweden (1 study). Two articles emerged from non-OECD countries: Nepal (1 study) and Uganda (1 study); and one study did not specify the country. Most studies were conducted in hospital settings (29 studies), with more than half of these at a department or unit level (17 studies). Other settings included regional level health organisations health centres or clinics, education centres, community health settings and one in a residential aged care facility. Most studies only involved a single institution, 28 seven studies involved in between 2 and 9 institutions, and three studies involved more than ten institutions with the largest number being 25 institutes.

The impetus for change for the majority of studies came from within the organisation (34 studies). Of these, changes in 17 studies were part of quality improvement programs/projects, 13 were due to changes required as a result of changes in organisational policies or demands and four were as part of the implementation of an organisational strategy. In two further studies, change was due to a directive from the state or national health department. In the final two studies, both conducted in non-OECD countries, the impetus for change was from healthcare professional associations.

Study Quality

The included studies varied widely in their scores using the QUADS criteria. Most studies performed strongly in reporting their theoretical and conceptual underpinning, and in reporting of research aims and the involvement of stakeholders in the process of change. Many studies were case examples of change models and presented in a non-traditional research format. This limited their suitability for quality appraisal regarding the reporting of recruitment methods, data collection and data analyses. Studies often performed poorly on reporting of sampling to address research aims, description of data collection procedure, recruitment and critical discussion of strength and limitations of the study. The findings of the quality appraisal may be indicative of the nature of the publications identified but highlight a lack of transparency regarding the quality of the research design and methods used to gather the data, which must be acknowledged in interpreting the review findings.

Review Findings

Change management models utilised.

Thirty-eight of the identified articles described applications of change management models predominantly applied from the discipline of management into healthcare. Most of the studies utilised either Kotter’s 8-Step Model (19 studies) or Lewin’s 3-Stage Model of Change (11 studies). Eighteen studies utilised the Kotter 8-Step Model for managing change, with one further study that integrated the Kotter model with Silversin and Kornacki’s model. 29–47 Eight studies referenced their application of the Lewin 3-Stage Model of Change into a healthcare setting, 48–55 with three further studies that integrated the Lewin model with a concern-based change management approach, McKinsey 7S Model of Change, and Roger’s Diffusion of Innovation Theory, respectively. 56–58 A further eight articles reported the use of six further models for managing and leading change: Influencer Change Model (1 study); 59 Prosci ADKAR (1 study); 60 Accelerated Implementation Methodology (AIM) (2 studies); 61 , 62 Advent Health Clinical Transformation Model (1 study); 63 Riches 4 stage model (1 study); 64 Youngs Nine Stage Framework (1 study), 65 and the CAP model (1 study). 66

Local-Level Change

Applications of the Kotter model were primarily identified in nurse-led, local level, single unit or site quality improvement projects. 29 , 43 , 45 , 47 , 67 One US and one UK study applied the model to the full project lifecycle in emergency departments to increase the number of risk assessments undertaken by nurses for falls and to enhance the triage system, respectively. 29 , 45 Both projects reported success in creating change, with a significant increase in fall assessments reported following the project 45 and the adoption of the triage system into routine practice. 29 Two further US-based projects utilised the model to bring about change to bedside handoffs in an intensive care unit and a surgical orthopaedic trauma unit, noting significant improvements reported by the nurses on those units following project completion. 43 , 47 Young’s Nine Stage Framework was also used in a nurse-led local-level quality improvement project in an acute paediatric setting to introduce a competency assessment tool. 65 The authors described in detail the models, issues and actions arising through the stages of pre-change, stimulus, consideration, validate need, preparation, commit, do-check-act, results and into the new normal. 65 The application of the model enabled a considered change process which analysed organisational and systems influences impacting the change proposed, leading to full uptake of the assessment tool at 18–24 months. 65

The Kotter model was also applied in a quality improvement program in head and neck surgery in a Canadian surgical department, with authors concluding the model provided a guiding principle to support the change process. 36 In a further leadership-focused change program, the Comprehensive Unit-Based Safety Program (CUSP) model within the Division of General Surgery applied the Kotter 8-step and five principles of dual-operating systems to the development and implementation of surgical quality improvement initiatives. 35 A guiding coalition of leaders that included staff and resident surgeons, nursing leaders, allied health and hospital administrators was brought together to tackle two key quality issues identified around surgical site infection (SSI) by front-line staff of wound care and poor team communication. 35 This ongoing structure to identify and address quality issues was supported by reporting of improvement data and regular meeting to build a quality improvement culture, yet data to determine the success of this initiative was not provided. 35 Reduction in SSI’s was the focus of a change project in a UK NHS Trust breast surgery team that engaged the Kotter 8-step principles, with each step operationalised in the Trust, demonstrating reduced SSI’s in the first quarter of the project implementation year from 7%-3.1% of inpatients and readmission rates from 2.2% to 0% in this period. 33 This trend continued into the second quarter, with the need to maintain momentum and embed this change identified as critical to ongoing success. 33

Lewin’s Model of Change was similarly applied in two nurse-led change projects to enhance bedside handover in four Australian hospitals across multiple wards. 50 , 51 The application of the model was as a way to describe the process of change rather than to guide the activities to be undertaken during the change effort, with model descriptively aligned by the authors to reflect the periods of data collection at baseline (unfreezing stage), changes being made to the handover process and policies and the post-intervention data collection regarding the handover process (refreezing). 50 , 51 In a further nurse-led change project regarding the implementation of an electronic patient caseload tool in a community setting, Lewin’s Model was employed as a structured change process through a series of steps, yet the primary stages reported were unfreezing and moving. 49 A key benefit of the application of this model was the focus it provided to the nurse leader to actively contemplate the change process and its progression. 49 Lewin’s Model was also drawn upon to frame the steps taken in implementing and evaluating a bedside reporting intervention in the US that sought to enhance nursing communication. 54 As such, patient satisfaction with nursing communication increased from 75% to 87.6% over a six-month period. 54

One physician-led study focused on bringing about change in the management of chest pain in a US emergency department using their locally developed AdventHealth Clinical Transformation method. 63 This approach integrates common components of major change management models in the period of designing and planning for change, with piloting, implementation and sustainment periods. A key value of taking this planned approach was the ability to maintain clinician engagement in the project and achieving outcomes at a timed accountable follow-up. 63 A multidisciplinary team reported the use of the Influencer Change Model, which seeks to address both motivation and ability across personal, social and structural levels, to enhance appropriate use of urinary catheters in a hospital in Canada. 59 This behaviourally focused approach was combined with PDSA cycles and led to a significant reduction in inappropriate catheter use. 59 A key factor identified by the authors in the success of the approach was the multi-modal change techniques to address more than just informational needs.

Institutional Change

Twelve institutional-level projects were identified. 30 , 37 , 38 , 40 , 41 , 46 , 48 , 52 , 56 , 58 , 68 , 69 The first was a hospital-wide multi-faceted intervention to reduce in-hospital transmission of antimicrobial resistance in Denmark, which recorded immediate and sustained change in antimicrobial consumption and the rate of Bacteria-producing extended spectrum β-lactamase (ESBL-KP) resulting from a project guided by Kotter from inception to completion. 30 The second hospital-wide project emerged from Singapore and aimed to enhance timely access to outpatient specialist care requested by the emergency department. 41 Utilising a change management process guided by the Kotter steps, the organisation realised the benefits of the change project in improving the proportion of specialist outpatient appointments given within the timeframe requested from 51.7% to 80.8%, early discharge from 11.9% to being sustained at 27.2%, and clinician compliance rates in performing the changes required of between 84% and 100%. 41 In the third hospital-level project, a project to achieve a baby-friendly hospital in relation to breast-feeding utilised the Kotter 8-steps to bring together a Breastfeeding Task Force and transform the hospital. 38 A pre- and post-project survey indicated that the change goals were realised over a 12-month period. 38 In the Kent and Medway NHS Trust, recovery clinics were implemented by nurses using Kotter’s model to enable greater user engagement in their care and enhance nursing care opportunities by protecting their time. 40 After three months of the project, administrative organisational data indicated evidence of enhanced user involvement in the service. 40

Stoller et al reported a teamwork enhancement intervention across four respiratory departments of a US hospital to implement and optimise utilisation of the Respiratory Therapy Consult Service (RTCS). The project was underpinned by organisational and individual change theories integrating Kotter's 8-step model with Silversin and Kornacki’s Amicus Model, and the Intentional Change Theory of Boyatzis. 46 The use of the RTCS significantly enhanced the allocation of respiratory therapy services in the hospital and has been embedded in institutional practice. 46 In a community-based palliative organisation in Australia, the term emergency medication was replaced with anticipatory medication over several years. 37 The Kotter model was applied to support the change process, primarily in building momentum around the perceived need for change and a guiding coalition to facilitate buy-in and direct to the change process. 37 The application of the latter components of the model, particularly with regard to how change was embedded, was not reported. 37

In a paediatric trauma centre, Lewin’s Model was utilised to guide a change process in which a collaborative care model led by surgical services with medical service consultation was introduced to manage trauma patients reducing the need for non-surgical admissions across the institution. 48 The project achieved a reduction in non-surgical trauma admissions from 30% to 3% of admissions over a three-and-a-half-year project period. 48 The model was applied closely to guide the change activities within this project, with a range of activities at each stage seeking to set the basis for change and its embedding in practice. 48 Lewin was also used in geriatric care settings to embed a new approach to the management of chronic conditions. However, the application of the model in this context was primarily focused on the moving stage, with few activities that appeared to address the first and third stages of the model and limited data reported of the outcomes of this change project. 52

Combining the Lewin Model with Roger’s Diffusion of Innovation Theory, Tetef et al, implemented the new technology of a bronchial thermoplasty program. 58 Lewin’s Model was used to couch all of the change activities. It was notable that unfreezing activities identified the development of new policies and procedures, with the overall project primarily focused on bringing in the new technology and the moving stage. 58 Data of the project impacts and success were not reported in detail. Across four medical-surgical units in two Kaiser Permanente hospitals in the US, a Nurse Knowledge Exchange (NKE) was developed to integrate change management methods into the implantation of practice change. 56 Lewin’s Model was introduced along with the Concerns-Based Model and Force-Field Models and integrated with design-centric methods in approaches to implement service-design changes. 56 Although limited in its initial success, when underpinned with the addition of The cake model for change that more gradually introduced the participating nurses to change management concepts, the NKE achieved increased patient engagement and in-room shift exchange over a 7-month period. 56

In a larger scale institutional project, Riches 4 Stages Model was applied to transitioning a radiation therapy department to a new hospital site. 64 The model identifies key feelings and experiences of people moving through change and was used as a grounding for developing approaches to mitigate any negative feelings arising and to support the change to come about. The authors reported the model as valuable in supporting smooth transition. 64

A final study of a large four-year change project introducing technology upgrades into a healthcare organisation utilised the Change Acceleration Process (CAP) model. 66 Critically, this study identified the core value of utilising change management methodology as addressing the foundational basis for change; and clinician engagement in a shared need and vision. 66 The authors reported that clinical engagement, and the considerations regarding the time required to be engaged, were important components of successful change. 66

System-Wide and Multi-System Change

Six national or system-wide projects were identified. 42 , 53 , 55 , 70–72 Kotter’s model was employed to bring about change in one of these through the use of peer-review models in radiation oncology across 14 cancer treatment centres in Canada. 42 Over a two-year period, the proportion of radical-intent radiation therapy courses peer reviewed increased from 43.5% to 68%, with some sites reaching over 95% use of peer-review. 42 In a Swedish region, 26 clinics participated in an examination of how local level change agents worked as a development unit group across the clinics. 55 The notion of the change agent is drawn from the Lewin Model, with links to change generators which are highlighted by the study as key within change efforts. In this study, it should be noted that the model was not applied to explore the role throughout the study. 55 In a further project across Geriatric Education Centres in the US, Lewin’s Model was applied to explore the relationship between changing practice and changes in an organisational context. 53 The model was retrofitted to two projects rather than applied prospectively to manage the change process. 53

One international multi-system project was identified that reported the management of change in a World Health Organisation (WHO) project seeking to shift Allergic Rhinitis and its Impact on Asthma (ARIA) from a guideline to integrated care pathways using mobile technology in patients with allergic rhinitis and asthma multimorbidity. 32 Employing Kotter’s model, the WHO working group employed a broad range of approaches and activities across more than 70 countries, engaging with national allergy programs and agencies to bring about change reporting substantial success over an 18-year period. 32 The project continues to engage the Kotter steps for each change cycle.

Balluck et al reporting the use of the Prosci ADKAR model along with the CLARC model through the CoVID-19 pandemic to transition from primary to team nursing, in which a team of health professionals manage a patient under one registered nurse, across 25 hospitals in US health system. 60 The study primarily reported a range of activities to undertake to align to each element of the models and concluded that the application of these models enabled leaders to plan for change more systematically, leading to successful change. 60 In a non-OECD context, two studies led by the same author reported the application of AIM to bring about change in two hospitals in Uganda and two hospitals in Nepal. In maternity services in Uganda and Nepal, change occurred through dissemination workshops, reminders, case reviews, practical workshops and team building guided by AIM methodology. The operationalisation of AIM was not detailed in the studies. 61 , 62

Applications of Change Management Models

Whilst many studies utilised structured change management models reported successful change, it was not possible to detect whether the use of a model, method or process contributed to the success. In five qualitative studies, analysis and commentary pieces explored the change management of successful and/or less successful projects against the Kotter steps in an attempt to explore whether the application of change management models differed in successful and/or unsuccessful projects in terms of the number of steps completed or the way in which they were completed. 31 , 34 , 39 , 44 , 57

Baloh et al followed eight hospitals in the US through a two-year implementation of team huddles (TeamSTEPPS) to explore, through interviews with 47 leader and change managers or champions, how they performed in relation to the three overarching Kotter phases. 31 Half of the hospitals progressed along all of the three broad phases and components within, with adherence to the Kotter steps in the first phase influencing the success of the final two phases. 31 Hospitals that did not adhere to the Kotter phases did however demonstrate successful change, with the scope and strategies used for implementation identified as key factors in successful change in these instances; linking the huddles to performance indicators, having a local-level scope or having a strong strategic approach to gain staff buy-in for projects of broader scope all contributed to successful change. 31 Similarly, Carman et al mapped, through interviews with key change agents, the application of Kotter’s model to organisational change in a US health centre. 34 The application of all eight stages of this model was apparent through the interviews and reported as central to the successful change effort to ensure a systematic process. 34

Using the Lewin and McKinsey 7S models together, Sokol et al described the application of change management theory to office-wide culture and structural support to meet the twin goals of safe opioid prescribing and treating patients with opioid-use disorder. 73 Integrating two approaches enabled the team to address specific change management issues under a broader framework of the overall change management process under the Lewin model. 73

In a larger scale project, a multidisciplinary group of staff involved in the development of the medication management services in each of six health systems across Minnesota were interviewed to explore the degree to which Kotter’s steps were followed during the development of the service change. 44 Thirteen emerging themes were grouped against the Kotter model and highlighted that supportive culture and team-based collaborative care were critical to the success of their change. Specifically, the programs reported as successful were those introduced in systems that used change management methods aligned more closely with the Kotter model. 44 In the final qualitative piece, Hopkins et al provided a commentary analysis on implementing a gainsharing program to incentivise value- over volume-based practice in two hospital and health systems in one US state. 39 This study reinforced the other qualitative works indicating that change management approaches that more comprehensively mapped to the Kotter model were associated with successful change projects in the implementation of gainsharing. 39

Our findings identify multiple change management models that are applied to bring about change in healthcare teams, services and organisations. In the reviewed articles, it was apparent that change management models provided a frame of reference for change agents to support them to consider key elements required for change to occur and be sustained. Key elements include exploring why change is needed and crafting the right messages for stakeholders at every step to bring them along on the change journey. In the included studies, models that included a series of stages or steps, eg, Lewin or Kotter provided change agents with a series of goal posts to monitor and to create moments of celebration along the change journey. Notably, there was little emphasis on reliance on the models to overcome resistance or develop specific change activities; their value was consistently in providing a broad guiding framework for clinicians creating change. 32

Drawing upon change management models as a guiding framework rather than as a prescriptive management process is in keeping with contemporary thinking regarding healthcare as a complex adaptive system. A complex adaptive system seeks to draw out and mobilize the natural creativity of health care professionals to adapt to circumstances and to evolve new and better ways of achieving quality akin to bottom-up change and requires change agents to shift away from the reliance on top-down, highly controlled change processes. 18 On this basis, we propose that when change management models are adopted with sufficient flexibility to be relevant to the context in which they are being applied and empower local level change agents, change management models may be used to compliment and support improvement and implementation methodologies. For example, Baloh et al in exploring the introduction and implementation of huddles in rural US hospitals noted the value of integrating broad concepts from change management models, particularly in relation to the earlier model steps, with appropriate implementation scope and strategies. 31

The primary change methodologies identified in this review were Kotter’s 8-Steps and Lewin’s Freeze – Unfreeze – Freeze model. Methods also emerged from this review that are not as prominent as other change management models and methods but appeared to be used successfully to create and sustain change in healthcare delivery models and services. These methods include Accelerated Implementation Methodology, Young’s Nine Stage Framework, Riches four-stage model of change, and General Electric’s proprietary change management model known as Change Acceleration Process (CAP), among others. This review has not determined one change management model as preferred over another. This finding suggests that the guiding framework and flexibility within this to enable a range of activities and actions suited to the particular circumstance is of key value rather than a particular change management approach. It was notable that in the context of healthcare, change management models were often used by clinicians in local-level projects. The models were rarely used to address issues of resistance and more often used to provide a framework to house a broad and diverse range of activities to facilitate successful sustained change.

Clinician engagement in the change process emerged as a critical factor for change to take hold and be sustained. Projects that were successful were often led by clinicians and/or positioned in terms of the benefits for patients or staff. 74–76 Our findings confirm existing evidence that suggests that when the patient or staff benefits are unclear, clinicians may be less engaged with the change activities leading to challenges in gaining and sustaining momentum with the change. 77

Change is naturally challenging for humans, particularly when it is rapid and ongoing. 78 , 79 Our findings reinforce current knowledge that those directly and indirectly affected by change are more likely to commit to and embrace change when they contribute to the decision-making about the change, and understand why and how the change is going to improve patient and/or staff experiences or the healthcare environment. 80 This is particularly noted in the context of change for quality enhancement. 74 , 81

Implications

The review findings suggest that when exploring evidence-based methodologies for creating and sustaining change, an integrative approach that draws upon models for change to support applications of models for improvement and/or implementation may be valuable for change agents. The common guiding principles found in many of the models utilised in the review, such as Kotter and Lewin’s models, highlight core common principles of involving people in change from the outset, working with their feelings about change and supporting change through good communication and collaboration behaviours. 82 , 83 These fundamental steps for change can be operationalised through drawing upon the Model for Improvement, which is underpinned by Deming’s System of Profound Knowledge and “Psychology of Change” principles. 84 The Model for Improvement highlights leveraging individuals’ motivation, or agency, as well as the collective agency of the team and a system that enables individuals and teams to exercise that agency. 82 , 83

The guiding principles of the change management models we identified as commonly used in healthcare seek to create an enabling culture for change; seen through shared ways of thinking, assumptions and visible manifestations. 85 Characteristics of an enabling culture in the reviewed studies included supportive and authentic leadership and sponsorship, engaged and committed staff, multi-disciplinary team involvement, a collaborative approach to work, strong communication behaviours and models, the ability to resolve conflict and capable staff with the capacity to engage in further development. The reviewed articles suggest an enabling culture for change is central to creating opportunities for and supporting clinician engagement from decision-making about change through to change implementation. 74 , 85 As such, there are implications for implementation research and appear to be opportunities to integrate change management and implementation models to enhance processes of healthcare change. It is well established that implementation research is focused to more than translation of evidence from bench to bedside. As the scientific study of methods to promote the systematic uptake of clinical research findings and other evidence-based practices into routine practice, and hence to improve the quality (effectiveness, reliability, safety, appropriateness, equity, efficiency) of health care, it is inextricably linked with healthcare change and its management. 86 Knowledge of influences on clinician and organisational behaviour gained through implementation research may provide substantial insight into approaches to operationalise change management.

One artefact of organisations with cultures supportive of change is the presence of co-design efforts. 87 Co-design is a method to meaningfully engage about a process or service change with service users, which can include staff, patients and caregivers. 88 The concept of co-design aligns well with change management, improvement and implementation science principles that converge on the centrality of stakeholder-led or support change. 89 Co-design approaches therefore provide one mechanism through which change management, improvement and implementation methods may be integrated for the purpose of creating change for quality improvement. Such approaches are however contingent on appropriate supports to ensure participants have both the capability and capacity to engage. 90

Limitations

Our findings must be considered in terms of the limitations of the included studies and the review process. It is possible that some relevant studies were not captured by the database search or were made available after the search date. The included studies were often case examples of change initiatives with limited breadth of sample and a lack of detail reported about the research methods. The quality of such studies was therefore challenging to appraisal due to the limited reported information. The ability to generalise findings from such studies was also limited when case examples were utilised. We do note however that the wide range of included studies demonstrated consistent commonalities across change principles and applications of change management models across multiple settings and change projects in health.

Change management models are commonly applied to guide change processes at local, institutional and system-levels in healthcare. Clinician-led change is common, with the value of change management models being primarily to provide a supportive yet flexible framework to direct change processes. The review also highlights the potential opportunities to integrate models for change management with models commonly applied for improvement and implementation to support positive changes in healthcare.

Funding Statement

No funding linked to this submission.

Data Sharing Statement

All data included in the review are publicly available research findings.

Author Contributions

All authors made a significant contribution to the work reported, whether that is in the conception, study design, execution, acquisition of data, analysis and interpretation, or in all these areas; took part in drafting, revising or critically reviewing the article; gave final approval of the version to be published; have agreed on the journal to which the article has been submitted; and agree to be accountable for all aspects of the work.

The authors report no conflicts of interest in this work.

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The key to promoting a strong risk culture within your organization is to tie risk to strategy, which engages the board and C-suite.

Follow up high-level engagement on risk management topics with effective and targeted training for all employees. Lastly, build a strong speak-up culture that encourages employees to report when things go wrong.

There is no magic wand compliance professionals can wave to accomplish these goals, panelists discussed at Compliance Week’s National Conference in Washington, D.C. Success in promoting a strong risk culture is based on trust built up over time, regular and effective communication to reinforce the message, and standing up to solve risk management deficiencies when they are pointed out by employees.

Risk management and corporate strategy should not run on parallel tracks but instead should be joined together in the minds of executives, said Joe Pugh, senior director, enterprise risk management and compliance at nonprofit interest group AARP.

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“We had some really rich conversations on risks in the boardroom,” he said.

Nicole Frew, executive vice president and chief compliance officer at Scotiabank, said the bank’s greatest asset is the trust of its clients, regulators, stakeholders, and employees.

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Employee training on risk management must be relevant to be effective, she said. Present an employee with an hour-long training module on a risk that isn’t relevant in their day-to-day work experience, and you could potentially lose their attention, even on different modules that contain relevant content.

“Everyone in our bank is responsible for risk management. Every person can build that trust or break it.” Nicole Frew, EVP, Chief Compliance Officer, Scotiabank

“Training has to be fit for purpose for the person on the front line in their role,” she said.

Creating a speak-up culture is important when attempting to establish a strong risk culture, Frew said. By and large, employees want to do the right thing and want their colleagues to do the right thing as well. Encourage them to put their hand up when they see something going wrong. This does not necessarily mean becoming a whistleblower—it is more about having confidence their issue will be taken seriously.

“Speaking up needs to be followed by listening up,” Frew said. “When things go wrong, that is the moment that matters. That is what people will watch. Did you solve the problem or did you finger-point?”

Pugh said AARP tracks compliance-related questions coming from employees and will often answer the questions, with some identifying markers removed, on the company’s internal messaging system.

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Leverage data collected on surveys to measure your risk management program’s effectiveness, Frew said. That data can be triangulated with data about gift and entertainment violations or consequence management more generally, to help a company determine whether the message of risk management is being conveyed effectively.

Frew said Scotiabank also has behavioral science professionals on staff to help gauge program effectiveness.

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• Original Article
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• Published: 11 April 2024
• Volume 24 , article number  62 , ( 2024 )

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• Jiesper Strandsbjerg Tristan Pedersen 1 , 2 ,
• Luís Filipe Dias 1 ,
• Kasper Kok 3 ,
• Detlef van Vuuren 2 , 4 ,
• Pedro M. M. Soares 5 ,
• Filipe Duarte Santos 1 &
• João C. Azevedo 6 , 7  

The Paris Agreement’s goal of limiting global warming hinges on forest carbon sequestration as a key in several national strategies. However, Portugal’s rising forest fire occurrences threaten its ability to meet ambitious 2030 and 2050 carbon sequestration targets. Considering fire and forest trends, this study aims to quantify whether Portugal can reach its carbon sequestration ambitions as stated in its 2030 and 2050 targets. We tested three national forest scenario extensions of the global Shared Socioeconomic Pathways (SSPs) and Shared Policy Assumptions (SPAs) based on a dynamic model, simulating forest area and carbon sequestration related to future fire risk and policies of fire management, forest management, restoration of burnt areas, and climate change adaptation. The model projects a rapidly decreasing forest area under existing Portuguese policies (PT-SSP3), a slow decline under moderate policy improvements (PT-SSP2), and an almost stable forest area under long-term sustainable policy developments (PT-SSP1). In PT-SSP3, carbon sequestration will be reduced to 60% by 2050 compared to 2015, while it declines to about 85% and 90% under PT-SSP2 and PT-SSP1, respectively. It is still plausible to reach Portugal’s 2030 sequestration obligations under the EU’s Paris Agreement target under all three scenarios, while the Portuguese GHG neutrality target is not reached in the presented scenarios. Our four introduced policy areas (increasing focus on fire and forest management, forest restoration, and climate change adaptation of forest stands) must be supplemented by other policy strategies, such as reforestation.

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Introduction

As climate policies are implemented to anticipate climate change and reduce climate impacts, scenario-based assessments (CAT 2022 ; Kriegler et al. 2014 ; UNEP 2023 ) play a vital role in informing national policy designs (Moss et al. 2010 ; van Beek et al. 2020 ; Pedersen 2023 ). Estimates of current emission levels (Friedlingstein et al. 2023 ) and emission scenarios (UNEP 2023 ) are vital to assessing policy progress for implementing the Paris Agreement (Schleussner and Fyson 2020 ). In addition, long-term scenarios are essential for evaluating the interconnection between societal drivers and emission levels (Dhakal et al. 2022 ) to inform strategies for mitigation and carbon removal (ESABCC 2024 , 2023 ).

Forest policies are fundamental since almost all national mitigation strategies (CAT 2022 ; UNEP 2023 ; UNFCCC 2021 ) and Paris Compliant Pathways (IIASA 2022 ; van Vuuren et al. 2018 ) involve carbon dioxide (CO 2 ) sequestration compensating for emissions in other (hard-to-abate) sectors (APA 2019 ; EU 2020 ). Although forest sinks currently offset about 9% of total European Union (EU) CO 2 emissions, the future mitigation potential of forests is highly uncertain, considering human practices and climate change (Costa et al. 2020 ; Vizzarri et al. 2022 ). Improved fire-management strategies since the 1990s are countered by the effects of climate change, with forest fires accounting for 24% of forest damage in Europe (Schelhaas et al. 2020 ).

Wildfire risks are projected to increase globally (Arce 2019 ; Costa et al. 2020 ; UNEP 2022 ) and in Portugal (Rego et al. 2021 ; Vizzarri et al. 2022 ), jeopardizing national carbon removal targets. Due to afforestation programs, mainland Portugal’s forest areas increased from 7 to 36% of total land areas between the late nineteenth century and 2020, with eucalyptus now being the dominant species (Reboredo and Pais 2014 ; WB 2023a ). The Portuguese Forest area decreased during 1990–2010 and increased slightly between 2015 and 2020 (FAO 2020 ; WB 2023b ), with an increasing number of burned areas where eucalyptus, maritime pine, and cork oak are the most commonly affected species (ICNF 2015 ). Furthermore, Portugal had the highest rate in EU-27 of annual wildfire-burned areas between 2006 and 2022 (1%/year) (EFFIS 2023 ). The absence of efficient forest management policies has increased the risk of forest fires (Ramos et al. 2023 ).

Identifying the effect of national policies on carbon sequestration is essential for informing Portuguese policy processes and is relevant to EU mitigation targets. The finite forest capacity as a carbon sink is critical to understanding the temporal values of biomass carbon (Timmons et al. 2016 ) and the role of national carbon sequestration in the Nationally Determined Contributions of the Paris Agreement and GHG neutrality targets.

We aim to quantify the potential future Portuguese forest area and carbon sequestration. The paper seeks to examine if Portugal can reach its 2030 EU obligation (5.8 Mt CO 2 e/year) (EC 2018 ) and its national GHG neutrality target by 2050 Footnote 1 (13 Mt CO 2 e/year) (APA 2019 ) under various policy scenarios ranging from current national forest–related policies to a set of long-term sustainable policies. To do this, we developed three national scenario narratives (PT-SSP1, PT-SSP2, PT-SSP3) expressing short-term economic policy focus versus long-term sustainability. The narratives are based on the global scenario framework of the Shared Socioeconomic Pathways (SSPs) (Riahi et al. 2017 ), Shared Policy Assumptions (SPAs) (Kriegler et al. 2014 ), and the Representative Concentration Pathways (RCPs) (Gidden et al. 2019 ; van Vuuren et al. 2011 ). The SSP narratives (socioeconomic conditions excluding policy) and SPA policy assumptions are used as a basis to design the national scenario narratives, which include both outside conditions for climate policy (from the SSPs) and forest climate policy (from the SPAs). They are translated into four straightforward and transparent policy variables, shaping the model input (national forest policies and climate change impacts) to quantify a set of three quantitative forest scenarios expressing forest area and carbon sequestration.

Our approach allows for a customized and realistic projection of how a country’s socioeconomic and environmental factors might evolve under the influence of global SSP-based trends, locally relevant climate, and other policies. The scenarios aim to facilitate strategic thinking and informed decision-making in the face of uncertainty about the future.

Methods, scenario, and model specifications

Our method followed three overall steps. First, we translated global SSPs to national PT-SSPs, consulting the scenario literature and relevant regional and national scenarios. Second, we defined policy scenarios based on a set of assumptions related to fire risks in current and expected policymaking in Portugal. Third, we built a systems dynamic model to estimate changes in forest cover and carbon sequestration from the present time to 2100 according to different levels of policy changes from current policies.

Considering that scenario development is an iterative and collaborative process, the scenarios were developed via input (interviews and meetings) from five representatives of the Portuguese Climate Ministry, four modelers at the Bank of Portugal, and two national forest experts. The stakeholder inputs aimed at facilitating strategic thinking and informed decision-making in the face of uncertainty about the future. Moreover, we consulted literature sources on, e.g., carbon density and sequestration, climate change impacts regarding parameters of survival of forests to fires, rates of depopulation, rewilding, fire-related issues, and economic policy instruments. This aimed to shape scenario assumptions and model settings, e.g., considering connections between policies, market incentives, climate impacts, forest species, and carbon densities.

Based on the scenario narratives, we built a computational model in Stella (Structural Thinking, Experiential Learning Laboratory with Animation) (Richmond 1994 ) to simulate the behaviors and interactions of those critical variables over time. Stella® is a user-friendly and icon-based modeling software for complex systems (Eedara et al. 2019 ; Patrick Smith et al. 2005 ). The Stella software was chosen because of its high transparency. It is shown comprehensively in similar research projects modeling climate and impact scenarios (Costanza and Voinov 2001 ; Oni et al. 2012 ), illustrating system dynamics and comprising an appropriate modeling approach based on the PT-SSPs’ complexity, requirements, and purpose. Socioeconomic variables could be further developed, including more narrative variables. However, we decided to keep the model simple and transparent. The model is a simplification of the real world. It is not a complex Integrated Assessment Model (IAM) as the global SSP models.

Scenario development

From global pathways to national ssp scenarios.

The scenario framework employed in this study follows the SSP-SPA-RCP structure, integrating global narratives of socioeconomic development (SSPs), climate targets (RCPs), and policy assumptions (SPAs) to facilitate comprehensive research on climate change dynamics, mitigation, and adaptation (O’Neill et al. 2020 ; Riahi et al. 2017 ; Kriegler et al. 2014 ; Gidden et al. 2019 ). Within the SSP-SPA-RCP scenario framework, the SSPs describe narratives of socioeconomic development, e.g., future energy and land use, and how the world may evolve in the future (Riahi et al. 2017 ). The RCPs originally represented radiative forcing pathways, compatible with abstract emission pathways by 2100, that can be translated into temperature increases relative to 1850–1900 (van Vuuren et al. 2011 ). They were later implicitly included in the SSP-RCP matrix as climate targets and other plausible climate outcomes (Gidden et al. 2019 ). The SPAs, finally, add standardized policy assumptions to the framework (Kriegler et al. 2014 ). The SPAs were designed to describe mitigation and adaptation policies and the level of international cooperation to address climate change challenges (Kriegler et al. 2014 ; van Vuuren and Carter 2014 ).

The global SSPs are a set of five scenarios that describe plausible future outlooks via a range of demographic, economic, technological, social, energy, and environmental factors (O’Neill et al. 2017 ; Riahi et al. 2017 ). Of these, we chose three, SSP1 (sustainability), SSP2 (middle-of-the-road), and SSP3 (rivalry), which comprise a range from high to low population, economic, and emissions growth by 2100. These three SSPs represent a comprehensive range to guide national vulnerabilities and opportunities for mitigation and adaptation challenges (Riahi et al. 2017 ).

Several types of interconnectedness may exist across global and national scales. Based on Kok et al.’s ( 2019 ) operationalization of Zurek and Henrichs’ ( 2007 ) conceptual approach, we aimed at making the local “consistent” with the global by adapting the global scenario narratives to the specific Portuguese national context, reflecting similar across-scale assumptions (Zurek and Henrichs 2007 ). We transferred the global SSPs to the national context by mapping SSP storylines and socioeconomic conditions (and SPA climate policy assumptions) to their national counterparts. Footnote 2 The PT-SSPs are not one-to-one equivalent to the global SSP narratives. For consistency, we focused on preserving the fundamental SSP characteristics at the national level, allowing for a direct comparison between international and national outcomes, e.g., focus on sustainability and high forest regulation in the PT-SSP1 and low focus on sustainability and short-term fragmented forest regulation in PT-SSP3.

While the national narratives also describe socioeconomic factors, such as economy and population, these variables are not directly included in the model. However, the model’s forest policies indirectly reflect future Portuguese socioeconomic and policy conditions. Our considerations regarding regions’ diversity of populations and socioeconomic characteristics in developing narratives are reflected in Dias et al. ( 2020 ). During this work, we updated estimates from the SSP database (Riahi et al. 2017 ) and forest scenarios (Chen et al. 2020 ) to reflect the most recent historical national developments (see SI Chapter 1).

The Portuguese narratives

The national and implicit SPA assumptions differ from low to high policy ambition across the three PT-SSPs. Consistent with the global SSP storylines, PT-SSP1 (long-term sustainable policies) assumes high political cooperation nationally and internationally, less intensive lifestyles, and high national policy regulation based on long-term forest policies stabilizing carbon sinks. The political focus is on conserving the current forest area. In the global SSP3 world, international cooperation is weak, and the world is deglobalizing (Fujimori et al. 2017 ). Similar assumptions guide the PT-SSP3 narrative. The current trend toward increasing national conservatism continues in several European countries. Such political parties affect the political agenda, which displays a low focus on ecological conservation, limited management practices, and fragmented international cooperation within the United Nations Framework Convention on Climate Change (UNFCCC). Portuguese forest, land, and fire policies develop at the same speed and ambition as in the past decade. Here, national politicians favor short-term economic interests and national security (PT-SSP3) rather than issues related to long-term environmental sustainability (PT-SSP1). PT-SSP2 represents a middle-of-the-road national scenario, including medium–high policy ambition between PT-SSP1 and PT-SSP3. Thus, PT-SSP2 is aligned with the global SSP2 narrative, and the SPA policy assumptions integrated into SSP2-4.5 (Gidden et al. 2019 ; Riahi et al. 2017 ), assuming moderate climate policy progress with several efforts to reduce greenhouse gas emissions but not as ambitious as in PT-SSP1. As in the global SSP2, PT-SSP2 assumes a slow decline in the rate of deforestation and intermediate adaptation and mitigation policy efforts.

To ensure credible cross-scenario comparisons, the global mean temperature is constant for all scenarios. It is defined by SSP2-RCP4.5, which is aligned with the current international policy pathway where current NDC targets are achieved (2.6 C) (Carvalho et al. 2020 ; UNEP 2023 ). The model does not include temperature but uses the same average increase in annual climate-induced fires for all scenarios (UNEP 2022 ).

National policy assumption variables

The rather complex PT-SSP narratives express essentially “long-term” (PT-SSP1) versus “short-term” (PT-SSP3) political and societal focus. These are translated into more simple policy variables that aim to inform our transparent model (Fig.  1 ). The numerical parameters differ between the three scenarios via four policy variables, reflecting the policies’ degree of sustainability and robustness in addressing key forest challenges. The PT-SSPs have climate-induced fire risk and forest and fire policies as key input variables, analyzing how policy options may affect future forest area and emissions sequestration. Inspired by historical and current Portuguese forest policies (Dynamics-as-Usual (DAU)), we translated the global land-use and forest narratives into four Portuguese policies guiding the three PT-SSPs: fire management (P1), forest management (P2), climate change adaptation (P3), and restoration (P4).

A Stella system dynamic model diagram for forest area and CO 2 dynamics in 2015–2100 from a mix of four forest policies comprising five key components: ( a ) forest area, ( b ) fires, ( c ) carbon storage, ( d ) carbon sequestration, ( e ) carbon emissions from fires, and ( f ) restoration

P1 generally corresponds to the 2020–2030 National Plan for Integrated Rural Fire Management (PNSGIFR) (AGIF 2020 ). It is still to be completed. In 2018, the PNSGIFR replaced the previous National Defense System Against Forest Fires (Decree Law No. 124/2006 of 28 June) after the high-impact fire events in 2017. Notably, the existing PNSGIFR (and PROF, see below) were not designed to address climate change. The integrated fire management system (SGIFR) is in force until 2030, aiming to reduce burned areas and fire severity.

P2 refers to forest planning instruments inspired by the National Forest Strategy and Forest Regional Plans (PROF) (GoP 2014 ). PROF concerns forest and landscape change. The Regional Forest Plans that define the standards for the coming decades are very conservative and do not promote change in forest cover and management and landscape composition and configuration. For example, the revised PROF for the 2020–2040 period maintains the limits of occupation of individual forest types of the previous PROF and does not favor silvicultural models of species relative to maritime pine and eucalyptus.

P3 corresponds to adaptation policy in the forest sector, which does not yet exist. However, adaptation is becoming transversal to Portuguese society, exemplified by the Portuguese adaptation roadmap project (RNA2100) (Soares and Lima 2022 ). Since 2010, a National Strategy for Climate Change Adaptation has been renovated in 2015 (PdR 2015 ). However, its implementation has been slow and limited. According to a recent climate law, regional plans for adaptation to climate change are expected to be developed (AdR 2021 ). Adaptation in the forest sector is expected to result from fully implementing the newly developed Landscape Transformation Programme – LTP (Resolution of the Council of Ministers No. 49/2020) (GoP 2020 ).

P4 concerns forest restoration policies, which have been modest (almost absent) in Portugal and have had a limited impact. The term restoration may include a lot of different initiatives, from ecological restoration of habitats to large-scale afforestation programs. There are existing programs for emergency measures in some burned areas after fires, but these are very localized and often applied too late to have an impact (to stop degradation in these areas). Therefore, Portugal has no restoration policy, but some Common Agricultural Policy (CAP) measures dealing with afforestation and emergency measures after fire. Unlike our policy approach, Portuguese policies have not yet included significant financial instruments for forest restoration, and most areas affected by fires in 2017 have not yet been restored. Financial instruments may include financial assistance to farmers or landowners for planting new trees on burned or degraded land.

In the case of Portugal, the critical divide is introducing structural reforms into forest and fire management policy. Increasing ambition in the implementation of existing policies (P1 and P2), an existing policy “idea” (P4), plus specific adaptation measures (P3) adequate to PT-SSP1. Extending current policy ambition trends without structural changes would fit into PT-SSP2. In contrast, the policies up to 2017 are typically PT-SSP3 (including low policy with high challenges to address mitigation and adaptation. Notably, policy progress has materialized since 2017.

In the PT-SSP2 and PT-SSP1 scenarios, policies are strengthened and adapted to fire and climate change impacts. Here, anticipative forest protection policies will be implemented between 2025 and 2035. These are indirectly assumed to affect population migration and the development of market-based mechanisms to incentivize landowners to adopt sustainable land-use practices and increase the carbon sequestration potential of their lands (however, not directly included in the model) for forest management (P2) and restoration (P4). The scenario policy narratives are described in Table  1 and how they are used in the model as driving variables (see The “ Model description and specifications ” section).

Model description and specifications

Figure  1 presents the stochastic dynamic system model to predict changes in forest area in Portugal by 2100 and associated carbon sequestration and storage potential. The Stella® software has been used to construct a variety of forest models for biomass dynamics (Timmons et al. 2016 ), depletion of forest stock (Jathar and Rahmani 2011 ), and biomass production (Ouyang et al. 2021 ).

The model comprises five components. In the first component (a), dedicated to forest cover, we set forest cover (in ha) of the four major tree species in continental Portugal (eucalypt, maritime pine, cork oak, and holm oak) plus the remaining species (other species) as stocks affected by restoration or rewilding (inflows) and fire and/or mortality caused by climate change related factors (outflows). Restoration is the establishment of new forest areas. It is controlled by the forest restoration policy, which defines the percentage of the areas lost in a specific year due to fire and mortality that are replanted the following year. In the case of other species, forest area growth is determined by rewilding, a rate relative to the percentage of other land uses (farmland and shrubland) that become forest due to the natural establishment of trees. Tree mortality caused by climate change is a rate representing the direct and indirect effects of climate change (droughts, pests, and disease outbreaks). It is affected by climate change adaptation policy. Forest cover is affected directly by forest management (P2) and indirectly by fire management (P1) policies. In the fire component (b), the forest burned area is the forest area lost to fires that affects all species and depends on fire management policy and climate-induced fire (the aggravation of larger fires over time).

The model also contains carbon components (c, d, e), covering storage and sequestration calculated directly based on forest area per class, assuming general constant carbon densities and rates in these pools, and emissions from forest fires alone, assuming all carbon stored in forest cover will be released to the atmosphere. Finally, restoration (e) calculates the overall area of forest expansion due to restoration practices (forest area component).

Quantitative model specification

The initial forest cover state variables (stocks) values were established based on the latest Forest National Inventory (ICNF 2015 ). Eucalypt area growth is limited to a maximum area of 845 kha, its current area, due to legal and ecological reasons. There is no limit to the expansion of maritime pine, cork oak, and holm oak. Forest area growth for all types except “other species” is defined via restoration, calculated based on forest loss and the strength of the restoration policy (P4). Expanding forest area under “Other Species” is based on a rewilding annual rate established as 0.05% of the non-forest area of mainland Portugal, assuming that abandoned land is converted to forest land at that rate.

The rate of climate-induced fires shifts gradually from 1 to 1.5 times in the 2015–2100 period according to the global UN Environmental Programme estimates (related to a 2.6 °C increase of global temperatures (UNEP 2022 ), equivalent to SSP2-4.5 (Gidden et al. 2019 ). The forest burned area was calculated based on a forest fire random variable following a log-transformed normal distribution with a mean of 4.60165 and a standard deviation of 0.42067 corresponding to the historically burned forest area statistics in Portugal (1990 to 2020). This represents the potential forest burned area in the country under the conditions observed in the last 30 years (EFFIS 2023 ).

For the carbon component of the model, we used central estimates of wide ranges of figures collected from available data on above- and below-ground carbon density (Cunha et al. 2021 ) and carbon sequestration (Pereira et al. 2009 ). The carbon component of the model is susceptible to carbon stocks and carbon sequestration rate estimates per forest type. The carbon stocks in the Portuguese forest calculated by the latest National Forest Inventory were compared with other estimates in the literature. The lack of soil organic carbon in the model was due to the impossibility of representing this attribute reliably due to significant variations in estimates and the ecological heterogeneity of the country. The forest fires carbon emissions component calculates emission by multiplying the forest area lost due to fires in forest types by the correspondent stored carbon amount.

As stated earlier, the scenario narratives and policy assumptions are translated into numerical values expressing “long-term” versus “short-term” political and societal focus and the degree of sustainability and robustness of policies in addressing key forest challenges as regards climate impacts. Policies are included in the model as variables affecting processes leading to forest expansion, burned area, and mortality. They are defined as factors ranging from 0 to 1 in the case of fire management and climate change adaptation policies, 0.1 to 0.3 in the forest management policy, and 0 to 2 in the forest restoration policy (see specific scenario settings in Table  1 ).

When the fire management policy is equal to 1, fire management policies do not affect reducing the annual burned area. When it is equal to 0, there is absolute control of fires, meaning no burned area. In PT-SSP1, fire management policies (P1) are set at 0.5, indicating that P1 policies are strengthened to a degree that reduces the burned annual forest area to 50%. The current policies scenario (PT-SSP3) is set to value 0.9, resulting in 90% burned areas. In the worst-case scenario, PT-SSP3, we assume a small improvement compared to the last 30 years. The improvements are due to spontaneous policy responses within the fire management sector to catastrophic wildfires, as in 2017 (EFFIS 2023 ).

In the forest management policy (P2) case, a value of 0.1 means that 10% of burned areas in a year will be definitively lost, whereas a value of 0.3 means that 30% of the forest area affected by fire will be lost to other land use classes. A climate change adaptation policy (P3) equal to 0 implies successful implementation of adaptation measures and results in zero tree mortality due to climate change, whereas 1 indicates no adaptation policy or unsuccessful implementation. Mortality due to climate change is equal to 0.005 of the forest area per year. The mortality rate is based on the assumption that Portugal would lose all current forests due to climate change alone in 200 years (this is a moderate assumption considering current literature). A forest restoration policy (P4) equal to 0 indicates zero restoration, and equal to 2 means annual restoration equal to twice the forest area loss in the previous year. For a complete description of model specifications, see Table 1–1 to 1–6 in the Supplementary Information (SI) Chapter 4.

Model evaluation

Model evaluation was based mainly on the model structure and behavior, assessing the reasonableness of the model structure and interpretability of functional relationships within the model, and the correspondence between model behavior and expected patterns of model behavior (Grant and Swannack 2008 ). A sensitivity analysis was conducted on model outputs of burned area, total forest area, and carbon stock and sequestration to changes in critical parameters, one by one. The model was validated using historical observations of forest stands (2005–2020), ensuring that the results of the PT-SSP3 model settings accurately reproduced the observed forest area patterns and variability, excluding the increase in climate-induced fire effect.

The carbon component of the model is entirely dependent on carbon stocks and carbon sequestration rate estimates per forest type. Estimates of the carbon component of the model were compared with other literature sources to evaluate the model’s carbon components. Our model estimates carbon stocks ranging from 71 to 67 MtC in the Dynamics-as-Usual (DAU) scenario for the initial 10 years (2015–2025), which is reasonable and acceptable for this research. Roteiro aims to reach a sequestration rate of 13 million tons (MtCO 2 e) annually from 2030 till 2050, assuming forests sequestered 9 MtCO 2 e/year in 2015 (APA 2019 ). The latest National Emissions Inventory report estimated sequestration ranging from − 10,292 to 21,454 MtCO 2 e/year from 1990 to 2020 (APA/UNFCCC, 2022 ). Ameray ( 2018 ) estimated forest sequestration rates ranging from 18.9 to 20.7 MtCO 2 e/year between 1995 and 2010, while our model’s estimates for the 2015–2025 period ranged from 36 to 40 MtCO 2 e/year, which is higher than other estimates based on other methodologies.

However, there are significant differences between what our model estimates based on the set of parameters used and the estimates available in other sources that were produced for particular conditions that our model does not address. The estimates of carbon emissions due to forest fires are within the range of values found in the literature (San-Miguel-Ayanz et al. 2022 ) and reports of the Copernicus Atmosphere Monitoring Service ( https://t.co/B4aDuUArt2 ). They differ from the National Emissions Inventory report (APA/UNFCCC 2022 ). However, these are not directly comparable since they reflect balances of emissions within the land use, land-use change, and forestry classes that are diverse. Despite its sensitivity to sequestration rates, we believe the model accurately reflects the overall trends of sequestration resulting from changes in forest cover across Portugal. Based on the results of the evaluation procedures followed, we considered the model valid for this research.

The model was established and run annually (DT = 1) for periods of 85 years, covering 2015–2100. 2015 is the reference year since the most updated forest inventory data are for that year (ICNF 2015 ). Policy settings are similar for all scenarios between 2015 and 2025. Hereafter, they change from current policy settings to the settings corresponding to each scenario tested. The model results are based on averages and a confidence interval of 5–95% percentiles based on 100 runs/simulations per scenario, under the settings considered for each PT-SSP scenario (Table  1 ).

Forest cover

The model simulation results showed that without any policy change, in the baseline scenario (PT-SSP3), the Portuguese forest area will decrease rapidly to about 75% by 2050 compared to 2015 levels, reducing carbon sequestration to 63% of 2015 levels (Table  2 ). In case of strengthened policy ambition (existing fire and forest management policies and newly introduced policies adaptation and restoration policies) implemented between 2025 and 2035, the forest area may almost recover by mid-century to 96% in PT-SSP1 and 93% in PT-SSP2 (Fig.  2 ), with carbon sequestration levels recovering to 92% and 87% of 2015 levels, respectively (Fig.  5 ).

Simulations of the total Portuguese forest area ( a ) and annual burned forest area in 2015–2100 ( b ) under three policy-mix combinations: long-term sustainability policy scenario (PT-SSP1, blue), moderate policy ambition (PT-SSP2, red), and no-change in current policies (PT-SSP3, gray). Estimates and uncertainty ranges are represented by averages ± 5–95% percentiles, measuring the variability in the simulation results based on 100 simulations per scenario. Graphs also include observed data before 2015 (and thus not the historical 2017 fires due to a lack of historical data post-2015)

After policy implementation, from 2025 to 2035, the forest area is projected to increase in PT-SSP1 and PT-SSP2 by 4% and 2% between 2030 and 2050, respectively. If policies continue without increased ambition (PT-SSP3), the total forest area is projected to decline by 15% during the same period (Fig.  2 ; Table  2 ).

Considering future climate change, it is unlikely to avoid a reduction of the total burnt area unless active forest and fire management policies are implemented. As illustrated in Fig.  2 b, PT-SSP1 projects a decling burnt area from around 60 kha in 2015-2020 period to 34 kha/year in 2050 (-44%), while the PT-SSP3 no change continuation of current forest policies (PT-SSP3) is projected to slightly increase burnt areas to 64 kha/year in 2050 (+9%). In comparison, Roteiro’s Yellow Jersey projects burnt area (not exclusively forest area) will decrease from about 150 kha/year in 2020 to 70 kha/year in 2050 (-54%) (APA 2019 ). In 2100, burnt areas are projected to decline from around 60 kha/year (2015-2020) to 48 kha/year (-22%) in PT-SSP1, and increase to 65 kha/year (+9%) in PT-SSP2 and 83 kha/year (+40%) in an PT-SSP3 future.

Figure  3 and Table  2 show that restoration slowly declines in PT-SSP3 after 2050, while it increases in PT-SSP2 and PT-SSP1 due to P4 restoration policies. PT-SSP2 restoration is higher than PT-SSP1 because of a higher annual burnt area in PT-SSP2. 

Projections of burned area (red line) and area of restoration (green line) 2015–2100 under three policy-mix scenarios: a continuation of current trends (PT-SSP3), a middle-of-the-road medium policy ambition (PT-SSP2), and long-term sustainability scenario (PT-SSP1) reflecting the policy-mix implementation. The figure expresses averages ± 5–95% percentiles. Historical data source: EFFIS ( 2022 ). Notice that historical data do not include 2017 (a year of massive fires)

Figure  4 shows declining projections of holm oak, cork oak, eucalyptus, and maritime pine between 0.6 and 1.5% per year until 2025 in all scenarios. Eucalyptus (− 1.3%/year) and maritime pine (− 1.5%/year) most rapidly, while cork (− 0.6%/year) and holm oak (− 0.8%/year) decline at a slower rate. This declining trend continues in PT-SSP3, while the curve changes for PT-SSP1 and PT-SSP2. This is an effect of adjusted forest policies implemented between 2025 and 2035. Forest stands start stabilizing around 2028 for PT-SSP1 and 2045 for PT-SSP2. The Other species category has a projected increase of about 0.4%/year throughout the century due to natural expansion.

Projected mainland Portugal forest area by species 2015–2100 under the three policy scenarios: a continuation of current trends (PT-SSP3), moderate policy ambition (PT-SSP2), and long-term sustainable policy scenario (PT-SSP1). The scenarios reflect implementations of the four examined forest policy-mix implementations. The figures express the averages of 100 simulations. The historical data source for 2015 is based on EFFIS ( 2022 )

In 2015, “Eucalyptus,” “Cork oak,” and “Maritime pine” comprised the largest shares of Portuguese forest areas. The long-term policies scenario (PT-SSP1) increased eucalyptus and maritime pine areas post-2030 due to the climate adaptation and restoration policies. In comparison, in Roteiro’s Yellow Jersey scenario projections, maritime pine and eucalyptus decline while oaks and other species increase (APA 2019 ). In all scenarios, “Other species” are favored in the long run, becoming the dominant forest class in 2100 since rewilding was assumed to be a permanent process acting at a constant rate.

In the PT-SSP1 scenario, by 2050, 90% of eucalyptus areas will persist compared to 2015 levels, while with moderate policies (PT-SSP2), 85% will remain, and without improved policies, only 60% of Portuguese eucalyptus areas will remain in 2050 (PT-SSP3). According to our model, the eucalyptus forest will almost disappear from the Portuguese mainland covering 43 kha in 2100 (6% of 2015 levels) in case no changes are made to the current policy approach (PT-SSP3). Maritime pine will practically disappear, covering only 1% of 2015 levels in 2100 (6 kha) in the PT-SSP3 scenario. Implementing adaptation policies, considering higher suitability in the north for these species, reduces the impacts of climate change, as illustrated in PT-SSP1 and PT-SSP2.

Carbon storage and sequestration

As shown in Fig.  5 , our model projects a rapidly decreasing annual carbon sequestration of 1.5% per year between 2015 and 2050 under current policies (PT-SSP3). In case of strengthened policy ambition (existing and newly introduced policies) implemented starting between 2025 and 2035, carbon sequestration rates are projected to increase 0.03%/year (PT-SSP2) and 0.2%/year (PT-SSP1) between 2040 and 2050. Sequestration rates in 2050 are projected to be 63%, 87%, and 92% of 2015 levels in the PT-SSP3, PT-SSP2, and PT-SSP1 scenarios, respectively (Table 2 ). In 2100, carbon sequestration will have recovered to 88% of 2015 levels in PT-SSP2, while in PT-SSP1, it is projected to be similar to 2015 levels by the end of the century (102% of 2015 levels). In PT-SSP3, it has declined to 15% of 2015 levels, according to our projections.

Scenarios of total carbon storage ( a ) and annual carbon sequestration ( b ) 2015–2100 under three policy-mix scenarios: a continuation of current policies (PT-SSP3), medium policy ambition (PT-SSP2), and long-term sustainability scenario (PT-SSP1) reflecting implementations of the forest policy mix implementation. Estimates represented by averages ± 5–95% percentiles based on 100 simulations per scenario

The current (2015) carbon storage in living biomass is assessed at 71 MtC (Baseline). It is projected to decrease to about 56 MtC in 2050 and 38 MtC in 2100 under the no change in current policies scenario (PT-SSP3) (Fig.  5 ). Assuming increased policy ambition on an intermediate level (PT-SSP2), the Portuguese carbon stock will drop between 2015-3030 and then increase to about 67 MtC by 2050 and 72 MtC (by 2100, proceeding 2015 levels. Under the more ambitious policies implemented from 2025 (PT-SSP1), the forest stock is projected to reach 2015 levels around 2060 and increase to 78 MtC by 2100. Carbon sequestration follows similar patterns in the simulated period.

We created a model to examine changes in forest area resulting from policy changes, assuming that forest area plays a significant role in carbon dynamics. Our results indicate that the current forest cover in Portugal is unlikely to be sustained under the current policy approach due to the direct and indirect effects of climate change. Portugal’s relatively low EU effort-sharing obligation by 2030 is achievable despite a drop in forest area. However, it is uncertain if Portugal can reach its 2050 net-zero targets. Yet, the scenario-based results indicate that forest cover and carbon sequestration declines can be tackled extensively through appropriate policies.

Our model does not explicitly consider the mechanisms responsible for carbon emissions and sequestration in forest areas or account for variations in emission and sequestration rates based on factors such as forest age and productivity. The model also disregards age structure or forest site growth. These limitations are considered when interpreting the results. In addition, to provide a transparent model, the scenario narratives are translated into simplified or straightforward variables.

There are few forest cover projections for Portugal. In 2009, researchers assumed a decreasing trend of the primary forest species eucalyptus, maritime pine, holm cork, and holm oak, which comprise 85% of Portuguese forest cover (Pereira et al. 2009 ). More recently, the Roteiro scenarios projected a total forest area decrease of 4–5% between 2015 and 2030 and 1.5–6% between 2015 and 2050. These projections include afforestation initiatives of 8 kha annually (APA 2019 ), which was not part of the PT-SSP assumptions. Notably, afforestation, in the PT-SSPs, is equivalent to the new forest due to the restoration policy that was implemented in the model but does not comprise an expansion of the total forest area (Table  1 ).

Projections in the Portuguese GHG emissions inventory assume a forest increase of 2% (from 4118 to 4215 kha) between 2021 and 2025 (APA 2020 ). According to World Bank estimates (for Portugal Mainland, Azores, and Madeira), there has been an almost unchanged forest cover from 2015 to 2020 (WB 2023b ). On the one hand, it shows the difficulties in scenario developments and, thus, the importance of implying various plausible future outcomes. On the other hand, it underlines the extent to consider long-term trends (decades) rather than short-term variability (5 years) when developing future scenarios (Pedersen et al. 2021 ; van Vuuren et al. 2010 ).

Table 3 shows differences in forest species composition in PT-SSP1 and Roteiro’s GHG neutrality scenario. Although the Roteiro and SSP scenarios are not directly comparable because of the difference in starting points, comparing our model’s results with Roteiro’s expectations is relevant. Similar tendencies exist, such as maritime pine and eucalyptus decreasing in both scenario series’ sustainability scenarios (PT-SSP1 and Yellow Jersey) and projecting overall forest decline.

Future forest cover depends on various factors, including wildfire, climate change, and policies. Expecting that climate change impacts will likely increase (IPCC 2022 ; UNEP 2022 ), our model addresses policy efforts and strategies of various ambition levels. Considering existing policies, the National Forest Strategy of 2015 (GoP 2020 ) has the ambition of retaining the forest cover of 2010 by 2030, not excluding the ambition of the previous National Forest Strategy of 2006 of 3500 kha, the largest forest area ever in Portugal (GoP 2020 ). However, several constraints were identified in these two policies, particularly fires and climate change (see the “ Policy opportunities ” section). Our results indicate that only a combination of efforts at all levels is able to cope with increasing fire and climate change impacts. Without climate change adaptation (P3), considering redistributing stands according to the most optimal ecological and climate zones, eucalyptus and maritime pine are projected to vanish from Portugal between 2075 and 2100, and other species will suffer significant declines (Fig.  4 ). Without efficient fire and forest management policies (P1 and P2) and increasing efforts to restore degraded land (P4), forest cover in Portugal at the end of the century can be less than half of today’s cover (Fig.  4 , Table  2 ). The results of the scenario simulations indicate that to maintain the current forest cover in the future, it is required that forest burned areas are reduced to 50–70% of the average of the last decades, tree mortality in burned forest stands is lower than 20%, mortality due to climate change is less than 0.5% per year, and that the same or twice the forest area lost to fires is afforested annually.

Portuguese commitments and targets

Portugal’s EU LULUCF effort sharing commitment of 5.8 Mt CO 2 /year by 2030 (EC 2018 ) is within the range of the three PT-SSPs by 2030. The scenarios project a decline of sequestration rates to 84–88% of 2015 levels by 2030. The target allows Portuguese carbon sequestration to drop to 53% of 2015 levels (from 10.9 to 5.8 Mt CO 2 /year) based on the scenario estimates.

To reach the Portuguese the net zero target (NZT) of 13 Mt CO 2 /year by 2050 (APA 2019 ) Footnote 3 sequestration needs to increase by around 120% (from 10.8 to 13 Mt CO 2 /year). PT-SSP1 and PT-SSP2 break the curve of declining sequestration rates around 2040, diminishing the loss in sequestration rates to 92% and 87% by 2050, respectively. On the contrary, with continuation of current policies (PT-SPP3) carbon sequestration is projected to decline to 63% by 2050.

Policy opportunities

Our results show a need to revise current policies and implement changes promptly to ensure the long-term stability of Portugal’s forests. By leveraging existing policy instruments, resources, and economic incentives, Portugal may stabilize forest cover and carbon sequestration and contribute to a more sustainable future society. The opportunity lies in timely and comprehensive action, combining scientific knowledge, innovation, and societal support for successful forest management and climate mitigation. We suggest protecting highly productive landscapes (a), restoring areas affected by fires (b), and managing naturally expanding forests (c).

Protect and maintain high-productivity forest regions dominated by maritime pine and eucalypt, as they are crucial in carbon sequestration, economic value, and social importance. Implement policies to ensure their productivity remains optimal by adapting management to changing climate conditions and is easily implementable due to the existence of policy instruments and resources (e.g., land use data, regional forest plans, Cork Oak Protection Law, PRR) (RP, 2023, 2022, 2006) and economically attractive to local owners and industries. Proper selection and management, considering climate changes, should maintain these areas’ stability from 2022 to 2100 and target changes in the distribution of the species to respond to changes in environmental envelopes. However, maintaining optimal productivity will depend on industry capacity and effective public policies.

Establish timely and extensive restoration measures for areas affected by fires, especially in high-hazard regions with recurrent fire incidents. Utilize funding opportunities like the Landscape Transformation Program (PTP) (with PRR support) for large-scale restoration of degraded areas and adopting agroforestry systems with high carbon sequestration potential.

Embrace new forest cover established naturally in abandoned farmland or disturbed forestland as opportunities for climate action. Encourage rural development paradigms that combine scientific training and innovative practices to ensure effective carbon sequestration. Leverage conservation associations and qualified young professionals to shape forests in such areas while maintaining traditional activities and sustainable forest use. In addition, afforestation policies in current farmlands.

Policy changes and challenges

Plausible policy changes are illustrated in PT-SSP2 and PT-SSP1. In the PT-SSP1 and PTSSP2 scenarios, burnt forest areas are reduced by 45% and 9%, respectively, in the 2045–2050 period compared to 2015–2020. On the contrary, forest fires increase by 9% PT-SSP3. In PT-SSP1, strong fire management policies (P1) and forest management policies (P2) result in a declining burnt forest area number of fires from around 61 kha (2015–2020) to about 34 kha (2045-2050). In PT-SSP3, the number of fires is projected to increase by approximately 74 kha annually. In PT-SSP1, projected forest stands are about 3100 kha in 2050, near 2015 levels (3224 kha), while PT-SSP3 projects a decline to 2400 kha by 2050.

To ensure a relatively stable future forest area in Portugal, we suggest strengthening policies in fire (P1) and forest management (P2), introducing climate adaptation policies (P3) to protect forest stands, and additionally improving restoration actions to rewild burnt areas (P4). The PT-SSP1 considers expansion in forest cover as part of restoration policies and may also result from rewilding in abandoned land burnt areas. Furthermore, Roteiro introduced afforestation as a fifth policy option, which could be included in future PT-SSP elaborations. In our model, rewilding represents a spontaneous expansion of forest cover in the country, resulting in woodlands. Although this is not a policy option in the model, its implementation could be favored by rewilding policies, at least in part of the country. Other research states that wild forest has higher energy efficiency (e.g., lower day temperatures) than human-managed forests (Norris et al. 2011 ), which may increase climate change and fire resilience against rising temperatures (Moomaw et al. 2019 ; Moreira et al. 2020 ).

Policy challenges

There are several obstacles in forest management in Portugal to consider in policy designs, including:

1. Climate change: Portugal is facing increasing risks of wildfires due to climate change, with hotter and drier conditions making it more challenging to prevent and control fires (UNEP 2022 ). Thus, adaptation measures are to be integrated into forest management policies.

2. Forest fires: Portugal is the country in Europe with the highest number of fires and the largest burned area as a percentage of the country area (Effis 2023 ; San-Miguel-Ayanz et al. 2022 ). Although the number of fires has decreased over the last 5 years, fire is still a significant factor affecting forests in Portugal. This risk might increase due to climate change and depends on the land-use changes implemented (Turco et al. 2019 ).

3. Forest management challenges:

The resources allocated to forest management in Portugal are often inadequate to cover the costs of implementing effective forest management practices, such as fuel management. Several privately owned plots miss incentives, economic resources, and skills to effectively manage the forest and reduce fire risks (Marques et al. 2020 ).

Only 2% of Portuguese forests are under public ownership and management control, which differs from the European and World averages of 46% and 73%, respectively (florestas.pt; 2021). This situation increases the difficulty of forest management. It may help to explain why Portugal has a higher percentage of burnt area compared with countries with similar forest cover and climatic challenges (Cloke and Da Costa 2021 ; Costa et al. 2020 ; OECD 2023 ).

Forest land in Portugal is often fragmented into small parcels, creating economic viability problems. Most of the private forests in Portugal belong to small landowners (florestas.pt; 2021), making it challenging to implement effective forest management policies over large areas. Fragmentation can lead to conflicting priorities among a wide range of forest owners, including large and small forest owners, forest managers, public authorities, and firefighting agencies. The lack of stakeholder cooperation and coordination has led to ineffective forest management (Marques et al. 2020 ).

4. Over-reliance on monoculture plantations: Historically, Portugal has relied heavily on monoculture plantations of fast-growing eucalyptus and maritime pine for commercial forestry (APA 2020 ). However, these plantations are highly vulnerable to wildfires, insect outbreaks, and diseases and can negatively impact biodiversity, ecosystem services, and climate resilience (Moomaw et al. 2019 ; Moreira et al. 2020 ; Norris et al. 2011 ).

Addressing these challenges will require a comprehensive approach to forest management, including improved forest governance, increased investment in forest management, and promotion of more sustainable and resilient forest management models and practices. The ongoing efforts of Portuguese authorities take many of these constraints into consideration. Still, only policies simultaneously addressing them will be able to tackle the expected trend of decreasing forest cover and carbon sequestration/storage in the long run.

Conclusions

This study modeled the Portuguese forest area, carbon storage, and sequestration under three policy scenarios 2015–2100 to assess the current Portuguese carbon sequestration targets. The three scenarios comprise a no-change scenario with continuation of current policies (PT-SSP3), slow and moderately strengthened policy ambitions with introduction of a new climate adaptation policy (PT-SSP2), and a sustainability scenario with high ambition and long-term forest policies (PT-SSP1). Policy improvements in PT-SSP2 and PT-SSP1 are assumed implemented between 2025 and 2035.

The projected Portuguese forest area declines in all three scenarios

The current policies scenario (PT-SSP3) projects a rapid decrease in the Portuguese forest area to 76% in 2050 compared to the present (2015). The moderate (PT-SSP2) and high (PT-SSP1) policy ambition scenarios project declining forest areas to 93% and 96% of current levels by mid-century. Here, increasing wildfire risk is countered by a combination of improved fire management, forest management, and climate adaptation to reduce burnt areas. At the same time, strengthened restoration policies ensure regrowth in the burned areas.

Changes in forest area imply reduced annual carbon sequestration in all scenarios

The PT-SSP3 projects reduced sequestration by almost 40% by 2050, meaning that serious policy improvements are needed for Portugal to continue contributing to the EU’s Paris Agreement targets beyond 2030. With the improved forest policies in PT-SSP2 and PT-SSP1, carbon sequestration levels are projected to recover post-2035 reaching 87% and 98% of 2015 levels by the mid-century, and 88% and 102% by 2100, respectively.

In all three scenarios, Portugal is projected to reach its EU LULUCF effort-sharing commitment in 2030 (5.8 Mt CO 2 /year), while Portugal’s 2050 net zero target (13 Mt CO 2 /year) is not met

The EU commitment allows Portuguese carbon sequestration to drop to 50% in 2030 compared to 2015. The PT-SSP scenarios project declining sequestration rates to 84–88% by 2030 compared to 2015 levels. To reach the Roteiro target, carbon sequestration will need to grow to 118% in 2050 of 2015 levels. The scenarios project a decline in sequestration to 63% in case of no policy changes (PT-SSP3) and to 92% in case of high policy ambitions (PT-SSP1). The NZT LULUCF target appears impossible even under high policy ambitions. However, including a fifth policy (afforestation) may increase the changes.

A fundamental policy change is needed to provide a stable Portuguese carbon sink in the long term. A critical factor is introducing structural reforms into forest management policy

Recent data indicate an increasing trend in burnt areas. Inadequate land use planning and climate change have increased fire hazards, challenging the Portuguese forest. Fire-resistant forest cover, landscape-scale fire, forest management, and climate change adaptation are mandatory to overcome this challenge. The presented policy mix must be implemented to fulfill Portugal’s EU effort sharing and 2030/2050 mitigation targets (Policy 1–4). Current policies of fire management (P1), forest management (P2), and restoration of burnt areas (P4) should be strengthened. Furthermore, a new climate change adaptation policy should be implemented that redistributes forest species geographically according to changing climatic conditions (P3).

We aim to continuously refine and update the model as new data and knowledge become available to ensure the model remains relevant and robust. In addition, we aim to repeat the process periodically and adjust the model for other geographical contexts, e.g., to support decision-making in Global South countries.

Data Availability

Additional data analyses, figures, and datasets generated and analyzed during the current study are available from the corresponding author at reasonable request.

The Portuguese Carbon Neutrality Roadmap (Roteiro para a Neutralidade Carbónica 2050, hereafter Roteiro) (APA 2019 ) presents Portugal’s contribution to the Paris Agreement. It is often referred to as the 2050 Carbon neutrality target, but it is in reality a GHG neutrality target, including various greenhouse gas (GHGs) emissions.

For the SSP-SPA-RCP framework modelers normally put “outside conditions for climate policy” in the SSP and “policies” in the SPA, expressed by the RCPs. Thus, there could be an SSP2-current policy scenario (SSP2-4.5) and a SSP1-current policy scenario (SSP1-4.5), similar to assessments of the plausible effect of current NDC targets.

Notably the NZT implies also and uses (agriculture, urban areas, wetlands or swamps), not considered in the PT-SSPs.

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Acknowledgements

Pedro M.M. Soares would like to acknowledge the financial support provided by: the EEA Financial Mechanism 2014-2021 and the Portuguese Environment Agency through Pre-defined  Project-2 National Roadmap for Adaptation XXI (PDP-2), by the Portuguese Fundação para a Ciência e a Tecnologia (FCT) I.P./MCTES through national funds (PIDDAC) – UIDB/50019/2020 ( https://doi.org/10.54499/UIDB/50019/2020 ), UIDP/50019/2020 ( https://doi.org/10.54499/UIDP/50019/2020 ) and LA/P/0068/2020 ( https://doi.org/10.54499/LA/P/0068/2020 ).

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Jiesper Strandsbjerg Tristan Pedersen, Luís Filipe Dias & Filipe Duarte Santos

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Jiesper Strandsbjerg Tristan Pedersen & Detlef van Vuuren

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Pedro M. M. Soares

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Pedersen, J.S.T., Dias, L.F., Kok, K. et al. Increased policy ambition is needed to avoid the effects of climate change and reach carbon removal targets in Portugal. Reg Environ Change 24 , 62 (2024). https://doi.org/10.1007/s10113-024-02217-4

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How can I plan what to eat or drink when I have diabetes?

How can physical activity help manage my diabetes, what can i do to reach or maintain a healthy weight, should i quit smoking, how can i take care of my mental health, clinical trials for healthy living with diabetes.

Healthy living is a way to manage diabetes . To have a healthy lifestyle, take steps now to plan healthy meals and snacks, do physical activities, get enough sleep, and quit smoking or using tobacco products.

Healthy living may help keep your body’s blood pressure , cholesterol , and blood glucose level, also called blood sugar level, in the range your primary health care professional recommends. Your primary health care professional may be a doctor, a physician assistant, or a nurse practitioner. Healthy living may also help prevent or delay health problems  from diabetes that can affect your heart, kidneys, eyes, brain, and other parts of your body.

Making lifestyle changes can be hard, but starting with small changes and building from there may benefit your health. You may want to get help from family, loved ones, friends, and other trusted people in your community. You can also get information from your health care professionals.

What you choose to eat, how much you eat, and when you eat are parts of a meal plan. Having healthy foods and drinks can help keep your blood glucose, blood pressure, and cholesterol levels in the ranges your health care professional recommends. If you have overweight or obesity, a healthy meal plan—along with regular physical activity, getting enough sleep, and other healthy behaviors—may help you reach and maintain a healthy weight. In some cases, health care professionals may also recommend diabetes medicines that may help you lose weight, or weight-loss surgery, also called metabolic and bariatric surgery.

Choose healthy foods and drinks

There is no right or wrong way to choose healthy foods and drinks that may help manage your diabetes. Healthy meal plans for people who have diabetes may include

• dairy or plant-based dairy products
• nonstarchy vegetables
• protein foods
• whole grains

Try to choose foods that include nutrients such as vitamins, calcium , fiber , and healthy fats . Also try to choose drinks with little or no added sugar , such as tap or bottled water, low-fat or non-fat milk, and unsweetened tea, coffee, or sparkling water.

Try to plan meals and snacks that have fewer

• foods high in saturated fat
• foods high in sodium, a mineral found in salt
• sugary foods , such as cookies and cakes, and sweet drinks, such as soda, juice, flavored coffee, and sports drinks

Your body turns carbohydrates , or carbs, from food into glucose, which can raise your blood glucose level. Some fruits, beans, and starchy vegetables—such as potatoes and corn—have more carbs than other foods. Keep carbs in mind when planning your meals.

You should also limit how much alcohol you drink. If you take insulin  or certain diabetes medicines , drinking alcohol can make your blood glucose level drop too low, which is called hypoglycemia . If you do drink alcohol, be sure to eat food when you drink and remember to check your blood glucose level after drinking. Talk with your health care team about your alcohol-drinking habits.

Find the best times to eat or drink

Talk with your health care professional or health care team about when you should eat or drink. The best time to have meals and snacks may depend on

• what medicines you take for diabetes
• what your level of physical activity or your work schedule is
• whether you have other health conditions or diseases

Ask your health care team if you should eat before, during, or after physical activity. Some diabetes medicines, such as sulfonylureas  or insulin, may make your blood glucose level drop too low during exercise or if you skip or delay a meal.

Plan how much to eat or drink

You may worry that having diabetes means giving up foods and drinks you enjoy. The good news is you can still have your favorite foods and drinks, but you might need to have them in smaller portions  or enjoy them less often.

For people who have diabetes, carb counting and the plate method are two common ways to plan how much to eat or drink. Talk with your health care professional or health care team to find a method that works for you.

Carb counting

Carbohydrate counting , or carb counting, means planning and keeping track of the amount of carbs you eat and drink in each meal or snack. Not all people with diabetes need to count carbs. However, if you take insulin, counting carbs can help you know how much insulin to take.

Plate method

The plate method helps you control portion sizes  without counting and measuring. This method divides a 9-inch plate into the following three sections to help you choose the types and amounts of foods to eat for each meal.

• Nonstarchy vegetables—such as leafy greens, peppers, carrots, or green beans—should make up half of your plate.
• Carb foods that are high in fiber—such as brown rice, whole grains, beans, or fruits—should make up one-quarter of your plate.
• Protein foods—such as lean meats, fish, dairy, or tofu or other soy products—should make up one quarter of your plate.

If you are not taking insulin, you may not need to count carbs when using the plate method.

Work with your health care team to create a meal plan that works for you. You may want to have a diabetes educator  or a registered dietitian  on your team. A registered dietitian can provide medical nutrition therapy , which includes counseling to help you create and follow a meal plan. Your health care team may be able to recommend other resources, such as a healthy lifestyle coach, to help you with making changes. Ask your health care team or your insurance company if your benefits include medical nutrition therapy or other diabetes care resources.

Talk with your health care professional before taking dietary supplements

There is no clear proof that specific foods, herbs, spices, or dietary supplements —such as vitamins or minerals—can help manage diabetes. Your health care professional may ask you to take vitamins or minerals if you can’t get enough from foods. Talk with your health care professional before you take any supplements, because some may cause side effects or affect how well your diabetes medicines work.

Research shows that regular physical activity helps people manage their diabetes and stay healthy. Benefits of physical activity may include

• lower blood glucose, blood pressure, and cholesterol levels
• better heart health
• healthier weight
• better mood and sleep
• better balance and memory

Talk with your health care professional before starting a new physical activity or changing how much physical activity you do. They may suggest types of activities based on your ability, schedule, meal plan, interests, and diabetes medicines. Your health care professional may also tell you the best times of day to be active or what to do if your blood glucose level goes out of the range recommended for you.

Do different types of physical activity

People with diabetes can be active, even if they take insulin or use technology such as insulin pumps .

Try to do different kinds of activities . While being more active may have more health benefits, any physical activity is better than none. Start slowly with activities you enjoy. You may be able to change your level of effort and try other activities over time. Having a friend or family member join you may help you stick to your routine.

The physical activities you do may need to be different if you are age 65 or older , are pregnant , or have a disability or health condition . Physical activities may also need to be different for children and teens . Ask your health care professional or health care team about activities that are safe for you.

Aerobic activities

Aerobic activities make you breathe harder and make your heart beat faster. You can try walking, dancing, wheelchair rolling, or swimming. Most adults should try to get at least 150 minutes of moderate-intensity physical activity each week. Aim to do 30 minutes a day on most days of the week. You don’t have to do all 30 minutes at one time. You can break up physical activity into small amounts during your day and still get the benefit. 1

Strength training or resistance training

Strength training or resistance training may make your muscles and bones stronger. You can try lifting weights or doing other exercises such as wall pushups or arm raises. Try to do this kind of training two times a week. 1

Balance and stretching activities

Balance and stretching activities may help you move better and have stronger muscles and bones. You may want to try standing on one leg or stretching your legs when sitting on the floor. Try to do these kinds of activities two or three times a week. 1

Some activities that need balance may be unsafe for people with nerve damage or vision problems caused by diabetes. Ask your health care professional or health care team about activities that are safe for you.

Stay safe during physical activity

Staying safe during physical activity is important. Here are some tips to keep in mind.

Drink liquids

Drinking liquids helps prevent dehydration , or the loss of too much water in your body. Drinking water is a way to stay hydrated. Sports drinks often have a lot of sugar and calories , and you don’t need them for most moderate physical activities.

Avoid low blood glucose

Check your blood glucose level before, during, and right after physical activity. Physical activity often lowers the level of glucose in your blood. Low blood glucose levels may last for hours or days after physical activity. You are most likely to have low blood glucose if you take insulin or some other diabetes medicines, such as sulfonylureas.

Ask your health care professional if you should take less insulin or eat carbs before, during, or after physical activity. Low blood glucose can be a serious medical emergency that must be treated right away. Take steps to protect yourself. You can learn how to treat low blood glucose , let other people know what to do if you need help, and use a medical alert bracelet.

Avoid high blood glucose and ketoacidosis

Taking less insulin before physical activity may help prevent low blood glucose, but it may also make you more likely to have high blood glucose. If your body does not have enough insulin, it can’t use glucose as a source of energy and will use fat instead. When your body uses fat for energy, your body makes chemicals called ketones .

High levels of ketones in your blood can lead to a condition called diabetic ketoacidosis (DKA) . DKA is a medical emergency that should be treated right away. DKA is most common in people with type 1 diabetes . Occasionally, DKA may affect people with type 2 diabetes  who have lost their ability to produce insulin. Ask your health care professional how much insulin you should take before physical activity, whether you need to test your urine for ketones, and what level of ketones is dangerous for you.

Take care of your feet

People with diabetes may have problems with their feet because high blood glucose levels can damage blood vessels and nerves. To help prevent foot problems, wear comfortable and supportive shoes and take care of your feet  before, during, and after physical activity.

If you have diabetes, managing your weight  may bring you several health benefits. Ask your health care professional or health care team if you are at a healthy weight  or if you should try to lose weight.

If you are an adult with overweight or obesity, work with your health care team to create a weight-loss plan. Losing 5% to 7% of your current weight may help you prevent or improve some health problems  and manage your blood glucose, cholesterol, and blood pressure levels. 2 If you are worried about your child’s weight  and they have diabetes, talk with their health care professional before your child starts a new weight-loss plan.

You may be able to reach and maintain a healthy weight by

• following a healthy meal plan
• consuming fewer calories
• being physically active
• getting 7 to 8 hours of sleep each night 3

If you have type 2 diabetes, your health care professional may recommend diabetes medicines that may help you lose weight.

Online tools such as the Body Weight Planner  may help you create eating and physical activity plans. You may want to talk with your health care professional about other options for managing your weight, including joining a weight-loss program  that can provide helpful information, support, and behavioral or lifestyle counseling. These options may have a cost, so make sure to check the details of the programs.

Your health care professional may recommend weight-loss surgery  if you aren’t able to reach a healthy weight with meal planning, physical activity, and taking diabetes medicines that help with weight loss.

If you are pregnant , trying to lose weight may not be healthy. However, you should ask your health care professional whether it makes sense to monitor or limit your weight gain during pregnancy.

Both diabetes and smoking —including using tobacco products and e-cigarettes—cause your blood vessels to narrow. Both diabetes and smoking increase your risk of having a heart attack or stroke , nerve damage , kidney disease , eye disease , or amputation . Secondhand smoke can also affect the health of your family or others who live with you.

If you smoke or use other tobacco products, stop. Ask for help . You don’t have to do it alone.

Feeling stressed, sad, or angry can be common for people with diabetes. Managing diabetes or learning to cope with new information about your health can be hard. People with chronic illnesses such as diabetes may develop anxiety or other mental health conditions .

Learn healthy ways to lower your stress , and ask for help from your health care team or a mental health professional. While it may be uncomfortable to talk about your feelings, finding a health care professional whom you trust and want to talk with may help you

• lower your feelings of stress, depression, or anxiety
• manage problems sleeping or remembering things
• see how diabetes affects your family, school, work, or financial situation

Ask your health care team for mental health resources for people with diabetes.

Sleeping too much or too little may raise your blood glucose levels. Your sleep habits may also affect your mental health and vice versa. People with diabetes and overweight or obesity can also have other health conditions that affect sleep, such as sleep apnea , which can raise your blood pressure and risk of heart disease.

NIDDK conducts and supports clinical trials in many diseases and conditions, including diabetes. The trials look to find new ways to prevent, detect, or treat disease and improve quality of life.

What are clinical trials for healthy living with diabetes?

Clinical trials—and other types of clinical studies —are part of medical research and involve people like you. When you volunteer to take part in a clinical study, you help health care professionals and researchers learn more about disease and improve health care for people in the future.

Researchers are studying many aspects of healthy living for people with diabetes, such as

• how changing when you eat may affect body weight and metabolism
• how less access to healthy foods may affect diabetes management, other health problems, and risk of dying
• whether low-carbohydrate meal plans can help lower blood glucose levels
• which diabetes medicines are more likely to help people lose weight

Find out if clinical trials are right for you .

Watch a video of NIDDK Director Dr. Griffin P. Rodgers explaining the importance of participating in clinical trials.

What clinical trials for healthy living with diabetes are looking for participants?

You can view a filtered list of clinical studies on healthy living with diabetes that are federally funded, open, and recruiting at www.ClinicalTrials.gov . You can expand or narrow the list to include clinical studies from industry, universities, and individuals; however, the National Institutes of Health does not review these studies and cannot ensure they are safe for you. Always talk with your primary health care professional before you participate in a clinical study.

This content is provided as a service of the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK), part of the National Institutes of Health. NIDDK translates and disseminates research findings to increase knowledge and understanding about health and disease among patients, health professionals, and the public. Content produced by NIDDK is carefully reviewed by NIDDK scientists and other experts.

NIDDK would like to thank: Elizabeth M. Venditti, Ph.D., University of Pittsburgh School of Medicine.