March 9, 2011

The Outer Rim of Risk

By Melanie Lockwood Herman

The discipline of risk management invites a close-up examination of events and circumstances that threaten the mission and goals of an organization or that offer the promise of mission-advancing benefit. Nonprofit CEOs, CFOs, senior staff and even board members are instinctively drawn to taking a closer look at the risks that cause them to lose sleep or inspire optimism about the future.

A close-up view of risk is beneficial and productive on many levels. By examining risk up close you may learn that something long perceived as frightening in truth warrants little or no cause for worry. Like a small lap dog with a loud and ferocious bark, some of the risks your nonprofit faces may be less worrisome when you open the door and venture a bit closer. For example, your concern about the potential difficulty of an orderly evacuation of a busy community center may lessen after a practice drill goes off without a hitch. Practice is one way of getting a close-up view. A close-up look may also reveal weaknesses in your plans. With valuable data in hand, you can set about closing the gaps, fixing the leaks, and enhancing your readiness for risk. Taking a closer look at the risks that offer the opportunity for growth is a starting point for choosing the most promising path.

The irresistible lure of a close-up look may, however, have downsides for leaders seeking to transform basic risk management practice into a comprehensive, inclusive approach to risk. Why? Because appreciating and understanding risk and guiding organizational resources in the face of an always-changing risk landscape also require the view one gets by looking up and stepping back. Look no further than the birdfeeder on your back porch for an example of feathered risk managers at work. Notice how the goldfinch or cardinal looks up to scan the horizon without losing focus on the feast before him.

Click here to read the continuation of this article online… or click here to view/read the article in the interactive version of the brand-new edition of Risk Management Essentials.

Melanie Lockwood Herman is Executive Director of the Nonprofit Risk Management Center. She welcomes your ideas about any risk management topic, feedback on this article and questions about the Center’s resources at Melanie@nonprofitrisk.org or (202) 785-3891. The Center provides risk management tools and resources at www.nonprofitrisk.org and offers custom consulting assistance. Melanie’s recent books include No Surprises: Harmonizing Risk and Reward in Volunteer Management-5th Edition, available as an old fashioned hard copy book or as a downloadable PDF.

Custom Workshops and Polished Speakers Available

The staff of the Nonprofit Risk Management Center spend countless hours on the road each year speaking to diverse audiences of nonprofit leaders. We are available to design and deliver customized keynotes, workshops, seminars or stay-at-home webinars to address the challenges facing your members, affiliates, staff, board or training program attendees. During recent years we’ve spoken on topics ranging from Managing HR Risk, to Governance Risks, Insurance Buying for Nonprofits, Volunteer Risk Management, Community Public Relations, Managing Reputation Risk, Top Legal Risks Facing Nonprofits and much, much more.

Our calendar for 2011 is filling quickly. We’ve identified a handful of “hot topics” for 2011 based on what we’re hearing in our travels, from clients in our consulting practice and from our day–to–day work answering questions from seasoned nonprofit leaders. We hope these topics will serve as inspiration as you plan your educational offerings in 2011. To learn about our fee structure and review our list of “hot topics” for 2011, click here. To review our upcoming engagements and compare our schedule to yours, click here.

Risk Management Essentials

The Winter 2011 edition of Risk Management Essentials is now available. The brand-new issue features articles on the following topics:

• The “Outer Rim” of Risk: taking a comprehensive (versus a close-up) view of the risks facing your nonprofit.
• Fiscal Fitness: learn about a four-phase process to ensure that your nonprofit is on track this year.
• How to Lose Your Tax Exempt Status (without really trying): check out candid advice from IRS professionals!