December 7, 2011

Policy Drafting Help is a Click Away: My Risk Management Policies

If you’re looking for help developing custom risk management policies for your nonprofit, look no further. The Center is pleased to offer My Risk Management Policies, an affordable, easy-to-use online tool that helps you create custom policies in a matter of minutes. Policy templates are organized into 22 categories. Creating a new social media policy, youth protection policy or code of conduct is a snap using My Risk Management Policies, and requires far less time that it takes to find a mildly suitable sample using an Internet search engine.

2012 Cyber Training Schedule Announced

The Nonprofit Risk Management Center will deliver sixteen informative webinars on a wide range of critical risk topics during 2012.

First Wednesdays webinars cover topics ranging from “Risk and Decision-Making,” to “Managing Social Media Risk” and “Crisis Management and Crisis Communication.” Each one-hour program costs $59. Save $249 by registering for the entire series! Participate “live” or view and listen to recorded programs at your convenience.

Third Thursdays webinars focus on human resource risk. Four, 90-minute programs will be offered during the period January-April 2012. Each webinar costs $89. Save $97 by registering for the four-part series! Participate “live” or view and listen to recorded programs at your convenience.

Hot Off the Press — 2nd Edition of Ready…or Not

After selling out the limited first printing of the 2^nd edition of Ready…or Not: A Risk Management Guide for Nonprofit Executives, the Center is pleased to announce that copies of this new book are once again available in hard copy and eBook formats. This easy-to-read, practical guide addresses topics ranging from risk awareness to calibrating risk appetite. Authored by Melanie Herman, the Center’s executive director, Ready…or Not invites readers to embrace risk-taking in their organizations while paying close attention to stakeholder perceptions, risk communication and the relationship between risk and strategy setting. The 2nd edition features a brand-new chapter on “human factors” plus new content throughout. Learn more or order a copy today, here.

May I Have Your Attention…Please?

By Melanie Lockwood Herman

This week I’ve been reading Daniel Kahneman’s terrific new book, Thinking Fast and Slow. Many readers will recognize the author as the past recipient of the Nobel Prize in Economic Sciences and recall his ground-breaking work—with Amos Tversky—on the subject of decision-making. Kahneman begins Thinking Fast and Slow by reminding his reader about the relationship between “attention” and decision-making. We recognize that important activities, from family relationships to professional assignments, require our “undivided” attention. We observe and read about the tragic consequences of distracted driving, and complain bitterly when a teenager resists our request for a few minutes of her un-tethered attention. Yet many leaders deny their own inability to focus or discount the importance of giving important matters the “attention” they deserve.

During conversations with nonprofit leaders about the subject of assessing risks, I’ve heard several executives express the view that the only barrier to adequately uncovering risks is not having the time to devote to the task. These leaders express confidence that, with sufficient time, they would be able to identify most, if not all, of the risks facing the nonprofits they serve. Yet perhaps there is a potential downside to laser-like focus on the task—or risks—at hand. Kahneman explains that when we focus intently on a subject we may become “effectively blind” to the events unfolding around us. We may wind up seeing or understanding issues too simply, too narrowly, or without the benefit of context that a wider-angle, multi-tasking view offers.

For example, an IT risk assessment that focuses on a nonprofit’s current systems, uses and users may uncover risks to data security that require short-term action, but fail to adequately capture the implications of factors with which the IT team is less familiar, such as the recordkeeping and privacy requirements of a complex, yet-to-be-finalized contract with a government funder.

Kahneman is well known for his work on biases that impair decision making. In Chapter 31, "Risk Policies,” the author explains that having a broad frame for decision making and embracing the “outside view” are important remedies against two biases that often impair decision making: (1) the "exaggerated optimism of the planning fallacy”; and (2) the “exaggerated caution induced by loss aversion.” The first bias limits the paralysis that might otherwise constrain the risk-averse leaders of a nonprofit. When leaders are overly optimistic (e.g., they embrace their ambitious strategic plans as self-fulfilling prophecies), they may overlook warning signs suggesting that failure is not only possible, but may be probable. When the tendency to be risk averse inspires a commitment to look for factors that could impede success, the bias of loss aversion serves to temper unrealistic optimism.

Kahneman writes, “Optimists believe that the decisions they make are more prudent than they really are, and loss-averse decision makers correctly reject marginal propositions that they might otherwise accept.” By embracing (rather than discounting) the “outside” or contrarian point of view, and by straining to get a wide angle, multi-faceted perspective on risk, we can move away from the extremes of denying that failure is possible or presuming that it is inevitable, and adopt more realistic, practical and mission-advancing approaches to risk assessment and risk management.

On the subject of decision-making, I hope you’ll opt to join me for our series of provocative and practical risk-focused “First Wednesday” webinars in 2012, including the kick off program on “Risk and Decision Making” scheduled for January 4th at 2 pm Eastern. Visit the First Wednesdays Webinar Series webpage for details on the series, including dates and topics.

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 consulting assistance to organizations unwilling to leave their missions to chance.

Evolving Risk Management Programs: Our Specialty

Whether you’re trying to better understand your nonprofit’s appetite for risk-taking, sharpen your risk management skills, evolve your risk management efforts in response to changing circumstances, or educate your board about risk-taking and risk management, don’t hesitate to reach out the team at the Nonprofit Risk Management Center for assistance. We can support you in a number of ways. We’re available to help you:

• draft or revise risk management policies;
• design custom on-site, virtual or Web-based training programs;
• undertake an in-depth risk assessment; or
• design and implement an Enterprise Risk Management framework.

We offer advice and consultation on topics ranging from developing or updating youth protection policies, to strengthening governance practices. Why make the evolutionary journey alone when you can partner with a team of nonprofit specialists who live and breathe nonprofit sector risks? Contact Melanie@nonprofitrisk.org or call (202) 785-3891 to discuss your needs and learn how we can help.