Risk Management
Risk is defined as an uncertain future, event or condition that could affect your organization, either negatively or positively. It is measured in terms of likelihood and impact. While no one can eliminate all risks, non-profit leaders must accept that it is their responsibility to recognize and take reasonable precautions to prevent or reduce risks to an acceptable level. It is a major oversight area for the board and a key responsibility of management.
Practicing sound risk management is more than just looking out for potential problems, buying insurance and avoiding lawsuits; it is an ongoing process.
Risk management is the identification and prioritization of risks, along with a coordinated approach to minimizing or maximizing, monitoring and controlling their impact on your organization. Practicing sound risk management is more than just looking out for potential problems, buying insurance and avoiding lawsuits; it is an ongoing process. Your responsibility is to demonstrate that you have recognized the risks involved in your programs and have taken reasonable precautions to prevent them from causing harm to your organization’s clients, volunteers, board members, employees, participants, property or reputation.
FIVE-STEP PLAN FOR RISK MANAGEMENT
There are many risk management models on the market, but they can all be boiled down to the following steps:
- Understand Risk Management
- Identify Risks
- Analyze Risks
- Plan Risk Responses
- Monitor and Control Risks