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Executive Director
The discipline of risk management invites a close-up examination of events and circumstances that threaten the mission and goals of an organization or that offer the promise of mission-advancing benefit. Nonprofit CEOs, CFOs, senior staff and even board members are instinctively drawn to taking a closer look at the risks that cause them to lose sleep or inspire optimism about the future.
A close-up view of risk is beneficial and productive on many levels. By examining risk up close you may learn that something long perceived as frightening in truth warrants little or no cause for worry. Like a small lap dog with a loud and ferocious bark, some of the risks your nonprofit faces may be less worrisome when you open the door and venture a bit closer. For example, your concern about the potential difficulty of an orderly evacuation of a busy community center may lessen after a practice drill goes off without a hitch. Practice is one way of getting a close-up view. A close-up look may also reveal weaknesses in your plans. With valuable data in hand, you can set about closing the gaps, fixing the leaks, and enhancing your readiness for risk. Taking a closer look at the risks that offer the opportunity for growth is a starting point for choosing the most promising path.
The irresistible lure of a close-up look may, however, have downsides for leaders seeking to transform basic risk management practice into a comprehensive, inclusive approach to risk. Why? Because appreciating and understanding risk and guiding organizational resources in the face of an always-changing risk landscape also require the view one gets by looking up and stepping back. Look no further than the birdfeeder on your back porch for an example of feathered risk managers at work. Notice how the goldfinch or cardinal looks up to scan the horizon without losing focus on the feast before him.
In his thought-provoking book, The Courage to Lead, R. Brian Stanfield devotes an entire chapter to “The Comprehensive Perspective.” The subtitle of Chapter 7, “Resisting the Urge to Reduce” is a clever reminder about the downsides of simplification and getting too close to the matter at hand. Stanfield writes, “There are times when the overwhelming reality of life in the early 21st century makes us want to dig our heads in the sand like the ostrich, or confine our attentions to what we feel we can manage.” He adds: “But life challenges us to stand present to all of life as it is happening to us. Comprehensiveness means that our map of reality, or our context, takes in everything we can: there is nothing left out.”
When we limit our view of risk to threats we miss the other half of the risk equation and wrongly focus our entire risk management effort on risk aversion. When we opt for a telephoto lens through which to see risk in an organization we miss the beneficial vantage point of a distant perspective. Comprehensiveness is about looking at both halves of the equation, about positioning ourselves for a wide angle view, and about learning to anticipate events and situations that will affect our missions and organizations in the future. When we fine-tune our skills of anticipation we are in the best possible position to seize opportunities. By anticipating threats we can reduce their overall negative impact on mission-advancement and perhaps even turn a harvest of lemons into mission-quenching lemonade.
Stanfield offers several suggestions for leaders who seek to “be comprehensive.” The following is an interpretation of these suggestions with the discipline of risk management as both a lens and backdrop.
A comprehensive, wide-screen approach to risk isn’t a new approach, but rather a different take on what should be common sense. Stepping back from a downside risk that has materialized in your nonprofit may require more time and thought than a swift, close-up solution. But by recognizing the value of a comprehensive perspective and taking the time to be thorough and see both potential and realized risks as elements of a complex system, you are investing in the long-term health of your organization. The thoughtful “solutions” you identify that are grounded in that comprehensive perspective may increase your readiness to seize opportunities on the horizon and avert mistakes, missteps and reasons for worry.
Melanie Lockwood Herman is Executive Director of the Nonprofit Risk Management Center. She welcomes your feedback on this article and questions about the Center’s resources for nonprofit leaders. She can be reached at Melanie@nonprofitrisk.org.
Melanie’s most recent books include Ready…or Not: A Risk Management Guide for Nonprofit Executives, and EXPOSED: A Legal Field Guide for Nonprofit Executives. Information on this book and other recently released publications can be found at: www.https://nonprofitrisk.org//products/.
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“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.”
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“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.”
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