Basic Risk Management

Why Risk Management?

Risk management is a discipline for dealing with uncertainty. Every nonprofit faces uncertainty and risk. Few, if any, nonprofits operate in risk-free environments. From uncertainty about continued funding, program outcomes and the organization's ability to ensure client safety, managing a range of risks is required for both survival and success. Every nonprofit — including small organizations — can use risk management strategies and tools to protect vital assets.

The discipline of risk management helps identify, assess and control risks that may be present in operations, service delivery, staffing, and governance activities.

It is well worth the time to integrate risk management into your operations and there are many good reasons to do so.

  • The threat of litigation is increasing. Many nonprofits never face a lawsuit, but those that do know that it can be costly and time consuming. Good risk management can reduce these costs or perhaps help you to avoid a lawsuit altogether.
  • The risk of client harm. Your mission is to help people, not hurt them. Causing harm to a client, however unintentional, undermines your purpose and jeopardizes your mission.
  • For your own safety and security. Sound risk management will help create a sense of confidence and safety about your operation. In an atmosphere where the threat of unnecessary risk is reduced, a nonprofit can be more creative in providing services to clients and achieving results.

This tutorial will introduce you to the steps in the risk management process and help you begin to identify critical risks facing your organization.

Now, let's talk about the risk management process.