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By Melanie Lockwood Herman
The risk professionals with whom I have the pleasure of working are bright stars in the nonprofit universe. Without exception, the dedicated risk champions we meet—in consulting engagements, at the Risk Summit, and in our Affiliate Member orbit—seek to contribute to the success of the missions and strategic priorities of their nonprofit employers.
Yet these dedicated, eternally optimistic and future-focused leaders often tell us they feel trapped in a tension that I believe is crushing the soul of risk management. When NRMC proposed, many years ago, that nonprofits set aside the historical negative spin on risk, we saw nods of agreement and words signalling a tentative commitment to understand risk more expansively. More recently, as we have tried to describe risks simply, as possibilities, we sense gratitude for a one-word, universally understood definition.
But over time, many risk leaders have told us that while they embrace and tout an expansive view of risk they too often feel relegated to the narrow world of policies, procedures, accountability, and compliance. And while they work to champion the idea that risks are possibilities, they are reminded, time and time again, to focus on ‘what could go wrong’ and asked to compile and display their findings in never-ending risk registers and useless heat maps.
Risk leaders are engaged in a noble battle for the soul of the risk management discipline. The battle pits the desire to support big bets that could propel a mission forward against the familiar expectation of operational risk management: reducing the likelihood of events and circumstances that could negatively impact a nonprofit’s mission. Many battle-worn risk managers feel corralled into a narrow focus, such as “reducing the cost of insurance” or “reducing lost work time in the wake of workers comp claims.”
In Chapter 10 of Certain Uncertainty, Wendy K. Smith and Marianne W. Lewis refer to the common “tugs-of-war between irresolvable competing demands” reported in a study of CEOs. They cite familiar tensions, such as:
Nonprofit risk professionals experience near constant tugs-of-war and challenging tensions. These include:
There is no simple formula, algorithm, or exercise we can use to wrestle with the tensions in the risk management discipline. Each of use must continue to seek the glimmers of light and opportunity that will help us reach the other side. If you’re grappling with these tensions, I encourage you to:
Reflecting on these tensions may bring the sense that you and your nonprofit’s leadership, or you and your board, want very different things. That’s a discouraging feeling. When that happens, remind yourself that deep down, all of you want the same outcome: a wildly successful mission. Tough conversations about risk are simply part of the process of getting there.
Melanie Lockwood Herman is Executive Director of the Nonprofit Risk Management Center. She recently returned from vacation where she grappled daily with whether to continue trekking on foot to another modern art museum or patiently wait for a “hop-on-hop-off” bus. She welcomes your comments and questions about the tensions in the risk management discipline at Melanie@nonprofitrisk.org or 703-777-3504.
“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 the Center 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 the Center. 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 Center 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!