23 Sep Risk Assessment for Nonprofits
As stewards of charities, boards of nonprofits should take steps to assess and mitigate risk. Risk assessments allow you to assess and rank your organization’s risks and their probability of occurring and impact on operations. You can then build an inventory of risks or scenario planning to help you determine the best way to manage your risk and make informed decisions about avoiding, reducing or eliminating them.
Nonprofits face unique difficulties in assessing and managing risk. While for-profit companies have similar concerns, like employee training and the reduction of liability, nonprofits must be mindful of safeguarding donors’ contributions of both money and time. Data breach, funding shortages and political turmoil can be more real for nonprofits as for companies that are for-profit.
This article provides a three-step procedure that will assist you in moving from reactive to pro-active in protecting your mission on a long-term basis. No matter the size of your organization or level of expertise, the basic steps are the same.
Begin by identifying the risk that your organization is exposed to. This includes everything from a shrinking reserve ratio to the way your staff manages passwords. In this phase be sure that no department be left unaffected by your scrutiny: accounting and finance IT, donor relations, engineering human resources, public relations. Think about how a negative event could impact each of these areas. This includes costs, schedules and projects as well as long-term campaigns. Next, determine the likelihood of each potential risk and how much damage can be caused if it occurs.
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