Estimated Reading Time: Reading time not available
Executive Director
By Melanie Lockwood Herman
I’ve recently finished a book by the blogger Mark Manson. I found many delightful surprises in Manson’s writing, and a few unnerving ones. While I embrace the knotty dilemmas in risk management, I recognize that many nonprofit leaders do not find similar delight in mission-disrupting possibilities.
Manson writes, “Don’t hope for life without problems… There’s no such thing. Instead, hope for a life full of good problems. The secret sauce is the solving of the problems, not in not having problems in the first place.”
Can you imagine a world without risk? That world would be devoid of possibilities. At NRMC we use the word “possibilities” as the shortest, simplest definition of risk. Risks are possibilities, events or outcomes that may or may not happen. And while there will always be events and outcomes beyond our control, our actions in the face of uncertainty, and our readiness to respond to disruption, can make the difference between mission success and a mission succumbing to circumstance.
Manson’s words reminded me of an insight from another book, The Power of Giving Away Power by Matthew Barzun. Barzun writes, “Uncertainty is potential energy like heat from the sun. Uncertainty makes the whole system work—we don’t know which branches will grow, which will wither and which will connect with other branches.”
So instead of wishing away (or worse, ignoring!) potential disruptions, disruptors, and concerns, I urge you to recast problems, people and change as opportunities to build a stronger mission, an optimistic team, and a pathway to greater mission success.
If you’re ready to name and noodle on the knotty problems in your risk function, here are a few question prompts to help you get started.
As a linear thinker, I’m drawn to step-by-step instructions. Assembly diagrams confound me. While many risk teams use a list of action steps to address risk problems, that may not always be the best approach. Sometimes a schema or model is a better fit. During an ERM engagement many years ago, my colleague Diana Del Bel Belluz taught me how to diagram a risk by constructing an influence diagram.
An influence diagram uses geometric shapes to represent variables that can affect a desired outcome or downside risk event and help a team identify and understand the connections between objectives, uncertainties, and decisions/actions. A typical influence diagram uses a variety of shapes that correspond to variables. A risk-themed diagram might display objectives in diamonds, uncertainties in ovals, and decisions in rectangles. After identifying an objective, the next step is to identify uncertainties related to that objective. The third step is to identify decisions that could influence the realization of the objective. The last step is to add arrows that represent the direction in which influence is moving. An influence diagram may depict one or more objectives and the uncertainties and decisions in that objective’s orbit. Creating an influence diagram can help a risk team visualize risks and deepen its understanding of the array of uncertainties—and relevant decisions—that should be considered.
A short introductory video on influence diagrams is available HERE.
Whether your (good) problem is a risk that could upset or propel your mission or a barrier to progress in your risk function, never ignore the issue. Problems set aside rarely dissipate, and hand wringing doesn’t work. Reflect on the challenges your mission invites you to tackle. Break the problem into simpler component parts and consider who could help tackle those component issues and contribute to a durable solution of the problem.
We hope a few good problems will surface for your team in the new year. When they do, take a deep breath, return to the steps we’ve outlined, and see how working through challenges can benefit your mission and your team.
“First let me congratulate you on a conference well done. I had a great time at the Nonprofit Employee Benefits Conference and walked away with some valuable tools and questions that we’ll need to be addressing in both the short and long term. Thanks to you and your staff for all you do to provide us with quality resources in support of our missions.”
“BBYO’s engagement of NRMC to conduct a risk assessment was one of the most valuable processes undertaken over the past five years. Numerous programmatic and procedural changes were recommended and have since been implemented. Additionally, dozens (literally) of insurance coverage gaps were identified that would never have been without the work of NRMC. This assessment led to a broker bidding process that resulted in BBYO’s selection of a new broker that we have been extremely satisfied with. I unconditionally recommend the Center for their consultative services.
“Melanie Herman has provided expert, insightful, timely and well resourced information to our Executive Team and Board of Directors. Our corporation recently experienced massive growth through merger and the Board has been working to better integrate their expanded set of roles and responsibilities. Melanie presented at our Annual Board of Director’s Retreat and captured the interest of our Board members. As a result of her excellent presentation the Board has engaged in focused review which is having immediate effects on governance.”
“The Nonprofit Risk Management Center has been an outstanding partner for us. They are attentive to our needs, and work hard to successfully meet our requests for information. Being an Affiliate member gave us access to so many time- and money-saving resources that it easily paid for itself! Nonprofit Risk Management Center is truly a valued partner of The Community Foundation of Elkhart County and we are continuously able to optimize staff time with the support given by their team.”
“The board and staff of the Prince George’s Child Resource Center are extremely pleased with the results of the risk assessment conducted by the Nonprofit Risk Management Center. A thorough scan revealed that while we are a well run organization, we had risks that we never imagined. We are grateful to know that we have now minimized our organizational risks and we recommend the Center to other nonprofits.”
Great American Insurance Group’s Specialty Human Services is committed to protecting those who improve your communities. The NRMC team has committed to delivering dynamic risk management solutions tailored to nonprofit organizations. These organizations have many and varied risk issues, hence the need for specialized coverage and expert knowledge for their protection. We’ve had Melanie speak on several occasions to employees and our agents. She is always on point and delivers such great value. Thank you for the terrific partnership and allowing our nonprofits to focus on their mission!