Nonprofit Risk Management
Serving the Santa Barbara Community
The area of risk management can be confusing and somewhat amorphous to many in the nonprofit arena. Some think insurance is the answer to solving all risk management issues. Often, nonprofit board and staff members are so busy living out their mission that they don’t have the time to think about potential risk, let alone making a plan to address it. Contact Nonprofit Kinect today for a free consultation on creating a solid risk management plan for your organization.
What constitutes a risk? Simply speaking, a risk is any uncertainty about a future event that could threaten your organization’s ability to accomplish its mission. Generally, nonprofit assets fall into four categories:
- People: Board members, volunteers, employees, clients, donors, and the general public
- Property: Buildings, facilities, equipment, materials, copyrights, and trademarks
- Income: Sales, grants, and contributions
- Goodwill: Reputation, stature in the community, and the ability to raise funds and appeal to prospective volunteers.
Scenario Planning is Key to Risk Management
Many nonprofits use scenario planning to look ahead and spot opportunities and threats. When a nonprofit is successfully managing risk it is taking a proactive approach to reduce the likelihood or severity of some unknown occurrence that could prevent or seriously derail a nonprofit from fulfilling its mission. Risk management is a discipline for dealing with the possibility that some future event may cause harm. It provides strategies, techniques, and an approach to recognizing and confronting any threat faced by an organization in fulfilling its mission. Practical examples of risk management include:
- When an executive director checks references or confirms the educational background of a potential new staff member, that executive director is managing the risk of hiring the wrong person;
- When a board decides to set aside money in a reserve account or adopts a fund development plan, it is managing the risk that someday there may not be enough cash on hand to satisfy a need for resources;
- When a nonprofit decides to back-up its data “in the cloud” or adopts a policy to protect its database with a password, risk is being managed;
- When a client mentions that there is a slippery rug in the entry way and the nonprofit immediately deploys someone to replace the rug with a more stable one, risk is being managed;
- When a volunteer attends a training, or a board member attends a board orientation, risk is being managed.
Risk management opportunities occur in everything staff, board and program volunteers do on a day-to-day basis. In a risk-savvy nonprofit, everyone is a risk manager. The professionals at NonprofitKinect will work with you to develop a complete Risk Management Plan which will ensure that your organization’s risks are identified and addressed.