Defining and managing risk is certainly not everyone’s idea of an exciting day at the office, however, it’s an important subject for any charitable organisation. Over time I have come to realise just how important it is to get the balance of risk right.
Too little risk (nice safe haven stuff) and you can run a significant risk in itself – that your charity does not grow or develop its full potential.
Too much of it and you run the risk that you lose everything, or at least, more than is good for you!
So how do we ever get the balance just right?
I’ve found a good place to start is the strategic plan. Trustees’ appetite for risk can be sharpened by focusing on the objectives in the plan. Playing a “what if” scenario will help crystalise the impact of each risk and assess the level of comfort trustees have for risks involved in delivering the plan.
I have had some success running scenario games in trustee meetings involving some of the categories mentioned below. (The exercise may also help trustees judge whether their strategic plan really is bold enough to deliver what the organisation needs to thrive and prosper.)
Have a go at the following areas:
• Solvability, cash flow, fundraising and fundraising volatility
• Reputation and brand recognition
• New products/services, supporter groups or countries
• Acquisitions, mergers or collaboration
• Environmental impact
• Governance and compliance
• Human resources
So I would say, don’t always play it safe – inject a little risk and enjoy the process…and let us know how it works for you!
Article by Valerie Austin