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Risk Management Topics

WHAT IS A RISK ASSESSMENT?

Risk assessments help identify future events or circumstances that could affect the success of a project, or a nonprofit’s goals and strategic priorities. All nonprofit teams face obstacles and difficulties throughout their organizational journeys. Thoughtful leadership and mindful management alone can’t eliminate the possibility of frustrating or resource-draining challenges. Risk assessment and management is the key to a nonprofit’s resiliency.

THE FOLLOWING SHOULD BE CONSIDERED WHEN ASSESSING RISK:

Below are the five hallmarks of risk assessment. A concerted focus on each of these areas will help your organization produce richer, more actionable results; get more team members involved in risk-aware thinking; and refocus risk management activities, making them more practical and sustainable.

Reframe how you think about risk

People often fear risk or think about it in negative terms. One way to reframe risk is to showcase how risk assessment and management can actually advance the organization’s mission, as well as internal and external goals.

Assess risk in terms of your objectives

Risks should not be examined in isolation, but rather in terms of their relation to the objectives of the organization. Rather than asking yourself what risks keep you up at night, ask, “What risks could get in the way of keeping our team from achieving our outlined objectives?” One idea: As you outline your organization’s goals, write down a few risks for each objective that could prevent you from reaching them. Encourage your team to keep those risks top of mind while working towards those goals.

Assess risk from different perspectives

Team members within individual departments of an organization will have differing opinions on risks, and how those risks could impact the organization. Look for risk awareness and expertise in all corners of the organization. You might be surprised by the perspectives of individual team members. Considering all perspectives within the organization will help you develop a richer, more comprehensive understanding of each risk identified.

Avoid the prediction trap

Risk requires us to anticipate the future, which can be challenging. It’s human nature to anticipate specific outcomes for the future based on our past experiences. Dynamic risk assessment considers many different possibilities for risks that could materialize. It’s important to consider all possible outcomes, and how the organization must act if any one of them comes to pass.

Don’t worry too much about the numbers

Many teams will assign scores – probability or likelihood scores – to risks. In reality, gauging the likelihood of a risk doesn’t change your response to the risk – you’re either prepared or you’re not. A more important exercise would be focusing on your organization’s response to each possible outcome.

HOW TO CONDUCT A RISK ASSESSMENT

Nonprofit teams can perform a risk assessment themselves or work with a consultant. There are three primary approaches to conducting a risk assessment, each with its own meaningful, mission-advancing way of uncovering and better understanding the risks your organization faces.

Intuitive Approach

Some leadership teams intuitively ponder the risks associated with any change in strategy or new program, asking questions like “What are the potential risks associated with that?” Team members can take turns in the risk champion or devil’s advocate role. One of the goals we’ve heard client teams reiterate time and time again is that they want risk management to be “baked-in” rather than “bolted-on” – meaning all team members are considering risks while making decisions each day.

Checklist Approach

Checklists are a simple and inexpensive way to assess and track risk management capabilities and identify gaps. Possible uses for checklists in your risk assessment strategy include:

  • Identifying the essential items you will need to take to an off-site activity
  • Summarizing the action items anticipated or required at your next board meeting
  • Making certain that you have collected key information from victims and observers in the minutes following an accident or near-miss
  • Noting the steps personnel must follow in responding to requests for reference checks or media interviews
  • Describing the steps that will be followed in the event of the unplanned or sudden departure of the executive director or board chair

Deep Dive, All-In Approach

A comprehensive risk assessment, facilitated by an internal or external risk champion, is the most effective approach to understanding risk.

Leaders of larger U.S. and international nonprofits often prefer to engage a consultant to facilitate and guide a a risk assessment. An independent risk assessment increases the confidence of stakeholders and inspires practical action to position the nonprofit for continued success. Hiring a consultant is a great solution if your team is strapped for time and seeks a trusted advisor to keep the project focused and on schedule.

NEED HELP CREATING A RISK ASSESSMENT FOR YOUR NONPROFIT?

Join the NRMC Affiliate Program

A member of the NRMC team will meet with you by phone or video conference to suggest ways to get started. As an affiliate member, you’ll have year-round access to our team for follow-up questions about the risk assessment process. Learn more.

Get our Web App

Leaders of small nonprofits may want to try our affordable web app, My Risk Assessment. Simply answer a series of questions about your nonprofit and the app will generate a summary report with recommendations for your organization. Learn more.

Hire NRMC to Conduct a Comprehensive Risk Assessment

An NRMC-led risk assessment helps nonprofit teams improve operations, organizational culture and processes, with the ability to continue the work after our engagement.

We help nonprofit leaders:

  • Strengthen operations and mission-focused programs
  • Anticipate, rather than forecast, risk 
  • Identify the top risks facing an organization
  • Prioritize risks based on opportunities to build resilience
  • Develop practical risk mitigation strategies and action plans
  • Communicate with and involve a diverse array of team members in risk assessment and risk action planning
  • Foster a culture of risk awareness 
  • Design and deliver engaging reports to Boards and board committees

You’ll receive specific, clear recommendations in areas ranging from structure and leadership to day-to-day operations. Our recommendations spell out what, why, and most importantly, how. We’ve led more than 150 risk assessments for nonprofits with diverse missions. Learn more.