As guardians of charitable organizations, nonprofit board members should be proactive in evaluating and minimize the risk. A risk assessment can help you to assess and rank your company’s risks in terms of their likelihood of occurring and impact on the operations. You can then build the risk register or scenario planning to help you identify your risks and make informed choices regarding avoiding, reducing, or eliminating them.
Non-profit organizations face unique challenges when it comes to assessing and managing risk. While for-profit businesses face similar concerns, like employee training and decreasing liability, nonprofits must be aware of the importance of protecting the contributions of donors, both money and time. Data breaches, funding shortages and political instability can be just as real for nonprofits as they are for for-profit companies.
This article offers a 3-step procedure that will assist you in moving from reactive to pro-active and protect your mission in the long run. Whatever the size of your nonprofit or experience, the fundamental steps are the same.
Begin by identifying all the dangers your nonprofit is facing. This includes everything from a shrinking reserve ratio to how your staff manages passwords. During this time it is important to not let any department go under your nose: accounting and finance IT and donor relations; engineering and human resource management and public relations. Consider what a negative event would look like for each of these areas, which includes costs, schedules and projects and long-term campaigns. Then, assess the probability of each risk, and then determine how much damage it could do if it occurs.