Risk Management for Non-Profit Organizations
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 risk, 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.
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.
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
Other Topics to Explore:
20 Questions Directors of Not-For-Profit Organizations Should Ask About Risk by Lindsay, Hugh, FCA, CIP, Chartered Professional Accountants of Canada. (2009) Free electronic copy.
Risk Management: A Guide for Non-profit and Charitable Organizations, by Bertrand, N. & Brown, Lyn. Prince Albert & District Chamber of Commerce. Imagine Canada: Knowledge Development Canada volunteerism Initiative. (2006)
Understanding Insurance and Risk Management Needs: recognizing the needs of non-profit, cultural organizations. Presentation to Eligible Cultural Organizations by Henderson Insurance, (November, 2017)
Enterprise Risk Management Discussion presented by KPMG to Heritage Saskatchewan, Museum Association of Saskatchewan and SaskCulture. (November, 2013)
How to Manage Risk, public wiki hosted by Knowhow Non-profit (2017)
Introduction to Risk Management, Quality Gurus, (2013)