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By Melanie Lockwood Herman and Whitney Thomey
Myriad situations make up the world of nonprofit finance risk. The image above illustrates some of the common preventable, strategic, and external sources of risky financial situations nonprofit finance leaders may encounter. We offer the following recommendations for fortifying your organization against downside effects.
What are the risks? Take stock of these suggestions and look for other areas that your organization might be exposed to financial risk events.
The NRMC team has suggested the categories of external, strategic, and preventable to help you organize and classify risks that you uncover in your nonprofit. Utilizing a classification system is one way to inspire appropriate proactive and reactive responses for each risk. For example, external risks are those that are beyond your direct control. Appropriate risk mitigation strategies for external risks tend to focus on contingency planning. Strategic risks are those that arise from the strategies your agency has adopted. Risk mitigation for strategy risks involves identifying what circumstances necessitate possible changes in those strategies. Preventable risks are those that your agency wants to avoid. Associated risk strategies tend to focus on ensuring that safety rules are clear, training is thorough, and all staff feel empowered to raise safety concerns without fear of negative consequences.
Determine reasonable steps and initiatives to:
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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.”
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!