As stewards for charitable organizations, boards of directors of nonprofits should take steps to assess and limit risk. Risk assessments allow you to identify and rank your organization’s risk, including their likelihood of occurring and the impact on operations. You can create a risk log or use scenario planning to rank your risks, and make educated decisions on how to minimize, avoid, or eliminate them.
Nonprofits face unique challenges when assessing and managing risks. While for-profit companies face similar concerns, like employee training and reducing liability, nonprofits must also focus on protecting the contributions of donors, both money and time. This means that the risks of data breaches financial shortages, and political turmoil are as relevant for nonprofits as they are for for-profit businesses.
This article offers a three-step method to help you move from reactive to proactive safeguarding your mission on a long-term basis. The fundamental steps are the exact same regardless of the size, or expertise of your nonprofit.
Start by identifying the risks that your nonprofit faces. This https://boardroomideas.info/how-to-reap-tangible-business-benefits-from-esg-strategy-development/ includes everything from a shrinking reserve ratio to how your staff handles passwords. During this period be sure not to let any department slip through your fingers: accounting and finance; IT as well as donor relations, engineering, human resource management, and public relations. Consider how a negative event might impact each of these areas. This includes scheduling, costs and projects as well as long-term campaigns. Then, assess the probability of each risk, and then determine how much damage it might cause if it occurs.