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Nonprofit Risk Management Center A source for tools, advice and training to control risks ... so you can focus on your nonprofit's mission

July 22, 2009

Back to Basics: Effective Risk Management May Require Culture Change

By Melanie Lockwood Herman

When nonprofit leaders reach out to the Center for advice on weaving risk management into the fabric of their organizations they often assume that what’s missing is a long list of policies. While adding new or updating existing policies may be in order, a bigger-picture issue almost always requires more immediate focus. That issue is the culture of the nonprofit, which may be either receptive or hostile to risk management. And, while culture change is a long term effort, starting as soon as possible will lend credence to everything else that follows.

In the Center’s forthcoming book, Ready…or Not: A Risk Management Guide for Nonprofit Executives, we explore the idea of “culture change” as essential to effective risk management. Unfortunately, the culture in a nonprofit may create disincentives to risk taking and sound risk management. Examples of these subtle but potentially damaging disincentives are found in the following questions:

  • Does your nonprofit reward staff who “go out on limb” or celebrate those who act as expected and required by working to meet, but not necessarily to exceed, the minimum duties contained in their job descriptions?
  • Does your nonprofit encourage staff and volunteers to “own up” to their mistakes, or does the “tone at the top” lead personnel to cover up, hide out or point the blame at colleagues?
  • Do the Board and CEO model the values of admitting mistakes, acknowledging incorrect assumptions and accepting personal responsibility for errors?

What type of culture is required to foster thoughtful risk-taking, enlightened risk awareness and inspired risk management?

One example of an environment where risk management can flourish is what I call the culture of reflection. A nonprofit that has embraced a culture of reflection is committed, organization-wide, to examining with care events that go contrary to the nonprofit’s plans. When someone is hurt instead of helped while participating in a social services program, the team members of that program insist on a careful review to determine “what went wrong.” The mid-level manager who witnesses a near miss, such as a minor accident involving a client that could have been more serious, steps forward to seek help determining how the accident could have been prevented altogether. The bookkeeper who tries to cover her tracks after discovering an error she made in entering payables is quickly caught and told that reporting mistakes is valued and covering them up is not. Nonprofits that demonstrate a culture of reflection are in the strongest possible position to avoid future mishaps and focus full attention on mission-critical activities.

The program for the 2009 Risk Management and Finance Summit for Nonprofits, September 21-22 in Austin, TX will showcase seven sessions addressing not-to-be-missed risk management fundamentals. These featured sessions include:

  • Risk Management 101: Practical Ways to Manage Risk in a Changing World —Ideally your risk management program creates an environment where your organization can take more risk, not less. This session will focus on basic risk management strategies and terms before moving on to small group discussion around real-life risk management challenges. Attendees will learn to apply the lessons from the workshop in a practical way to address how an organization might deal with risk every day. Strategies and exercises will help attendees walk away from the session with the tools to build and strengthen a sound risk management foundation for their organization that adapts to the everyday challenges of a changing world.
  • Culture Change and Risk Communication — Inspiring sound risk management practices in a mission-driven organization requires more than a process or framework and an hour in the conference room. Truly effective risk management efforts in the nonprofit sector take place when culture change is the guiding vision for the effort. As leaders appreciate the nuances of a risk-aware culture, an integral step is to communicate effectively. The co-presenters for this workshop will discuss proven strategies for inspiring culture change and effective risk communication. Some of the concepts discussed at this workshop are covered in the Center’s brand-new book, Ready…or Not: A Risk Management Guide for Nonprofit Executives.
  • Managing Special Event Risks — Special events are commonplace in the nonprofit sector. Whether your nonprofit hosts a single annual event or numerous events of different types and stripes throughout the year, special events bring a new breed of risk to your operations. Special events often require special attention on venue selection and logistics, security, the involvement of spectators and the general public, and the reliance on brand-new or spontaneous volunteers. The presenter for this practical workshop is the co-author of the Center’s soon to be released book on Managing Special Event Risks.
  • Mission-Driven Risk Management — Actions speak louder than words! Has your nonprofit leadership team taken the time to incorporate risk management practices that are aligned with your organization's mission? This session will help attendees understand why risk management cannot be an 'add on' or just another task ‘as assigned.’ Sound risk management practices can be used to sustain corporate stewardship in helping your organization achieve its mission.
  • Crisis Management — If a crisis is, “a change—sudden or evolving—that results in an urgent problem that must be addressed immediately”* most nonprofit leaders bring vast experience to the discipline of crisis management. What nonprofit CEO or Board Chair hasn’t faced a crisis? This workshop will explore the bases for effective crisis planning, crisis management and crisis communications, including how to adopt a “state of the art” approach to surviving a crisis facing your organization, regardless of the source or trigger.

    *Managing Crisis, Harvard Business Press, Pocket Mentor
  • Partnerships and Collaboration: Risk Management Lessons from Success and Failure — Nonprofit leaders are drawn to collaboration like bees to honey and moths to a flame. There’s nothing like a good old fashioned collaboration to bring out the sweetest aspects in people and their organization, but watch out for the partnership that might burn when you least expect it. This Summit workshop offers a practical approach to managing partnership and collaboration risks with inspiration from a soon to be released publication on this topic from the Nonprofit Risk Management Center.
  • Project Risk Assessment — Many nonprofit leaders worry about lurking risks. Have we identified everything that could go wrong? Control self-assessments (CSAs) have become increasingly popular with both auditors and managers as a way to identify and control risks internally. This facilitated technique brings out the best of an organization and its employees to identify its objectives, activities, risks, and controls. Participants at this Summit workshop will learn basic steps and methods to implement this powerful tool as well as other strategies, including working with consultants, to conduct a practical, results-oriented risk assesment.

The full conference program, including details on our dynamic plenary speakers, can be found at the following link.

EARLY-BIRD DEADLINE – The early-bird deadline expires on July 31, 2009. Register by July 31st to secure the low full conference registration rate of $395 or one-day rate of $225. The registration fee includes resource materials for all conference workshops, breakfast and lunch on both days of programming, and generous doses of inspiration and practical information. To register for the Summit, click here.

Questions?! Call the Nonprofit Risk Management Center at (202) 785-3891 or write to: info@nonprofitrisk.org.

Summer Issue of Risk Management Essentials Now Available

The Summer issue of the Center’s newsletter, Risk Management Essentials, is now available. To download a PDF of the newsletter, click here. To view the articles featured in the new issue online, click here. To request copies of the printed version for distribution within your organization, contact Sue Weir Jones at (202) 785-3891 or Sue@nonprofitrisk.org


© 2009 Nonprofit Risk Management Center

(c) 2009 Nonprofit Risk Management Center