March 4, 2015

Blissful Ignorance and Splendid Serendipity: Resources for Risk Success

By Melanie Lockwood Herman

“As the area of our knowledge grows, so too does the perimeter of our ignorance.”

For the Center’s consulting clients, a common expectation is that our team will help “fill the gaps,” or “add risks we’ve overlooked to our existing list.” These sentiments arise from the view that with time, attention, and perhaps the involvement of a risk expert, the risks facing an organization are fully knowable. In reality, instead of closing the ignorance gap, a focused effort to better understand risks often leads to the sense that there’s a lot more we don’t know than we originally imagined. There’s more to risk than our senses can process, and the landscape of risk won’t wait for us to catch up. The risks facing your nonprofit defy compilation in a neat list on a yellow pad, spreadsheet, or fields in a risk management information system. Not only are they morphing constantly—with and without any action on your part—some are completely hidden from view, like the bulk of an iceberg.

Embracing your ignorance—that you’ll never fully understand or be able to assign values to or plan for the “what ifs” and “uh-oh” moments of organizational life—is key to success. And if you truly want to get a better view of risk, consider doing the opposite of what some risk doctors prescribe. Put the “risk register” away, sit back and gaze at your vast risk landscape instead. Give yourself permission to ponder the things that are hard or impossible to quantify. For an organization heavily dependent on third-party contractors, what are the sorts of things that could happen to a contractor that would make life difficult or a lot better for the nonprofit? What is the nature of your relationship with that contractor, and how is it changing or might it change in the years ahead? For an organization that relies on customers, members, participants or consumers choosing the nonprofit over other options, what events (within or well outside your control) could disrupt or dramatically grow the loyalty you rely on? What do you know, and what don’t you know about changing consumer wants, needs and preferences?

The term “serendipity” was coined in the 1700s by Horace Walpole, an English art historian. He began using the word after reading a fairy tale, The Three Princes of Serendip, detailing the travels of three princes who were always making discoveries by accident and sagacity. Over time, the use of the word has changed, but experts suggest that between 30 and 50 percent of scientific discoveries can be attributed to serendipity. Note that serendipity isn’t mere chance—the three princes of Serendip were attentive and clever!

In an interview featured in the March 2015 edition of Hemispheres Magazine, Astrophysicist Neil Degrasse Tyson explains the importance of considering something that appears to be nothing to the process of scientific discovery. He explains how the decision to point the Hubble telescope at a “dull and boring patch of sky,” led to the capture of images of galaxies never before known or imagined. According to Tyson, one extraordinary image, referred to as the “Hubble Deep Field,” is why “experiments have a serendipity mode, so we can discover stuff we never thought or imagined was there.”

Instead of fooling ourselves into comfort because we have a catalog of risks, a list of action items for each, and a trustworthy risk “owner,” cast your gaze at the “deep field” landscape that gives rise to actions and events that could hamper or boomerang your best laid plans. Even though some of the most influential discoveries have been accidental (including microwave ovens, super glue, x-rays, dynamite, penicillin), there are certain things that can be done to prepare for the unknown.

1. Take Advantage of Ignorance—sometimes the person who brings a fresh or unexplored perspective on the risks you face is someone who is relatively new and a bit “ignorant” about the history of the organization. Resist the urge to discount the perspective of the newest member of the team. Newbies notice things that veterans have grown accustomed to. Long-time leaders and new volunteers will have very different perspectives on risks within an organization. Use this diversity to your advantage!
2. Accept That You Can’t Know Everything—one of the biggest mistakes you can make as a risk management leader is to assume that diligence and planning can prepare you to either avoid or effectively handle every downside risk. Leave your assumptions behind, and know that there will always be blind spots in your knowledge. Instead of trying to comprehend all risks facing your nonprofit, focus on being attentive to changes in the environment, responding quickly and cleverly to new challenges, and eliciting candid feedback from individuals who have different points of view based on their life experiences or longevity in the organization.

Risk Summit Sneak Peek

With provocative keynotes anchoring the conference program, we are now focused on developing our best-ever line-up of workshops, seminars and learning labs. The 2015 Risk Summit will include a series of hands-on workshops exploring a variety of risk techniques, from the Bow Tie technique to scenario planning. Appropriate for risk gurus and novices alike, these workshops will showcase techniques that help illuminate the nuanced nature of risk. Stay tuned!

Melanie Lockwood Herman is Executive Director of the Nonprofit Risk Management Center and the principal author of the Center’s new book: Exposed: A Legal Field Guide for Nonprofit Executives-2nd Edition. To inquire about the Affiliate Member program and Risk Help, contact Kay Nakamura at 703.777.3504 or Kay@nonprofitrisk.org.