You mention risk management to many people and their eyes glaze over. But it is an essential part of a manager’s toolkit. I often talk about my role being that of giving people the chance to step back and take stock, and risk management is a key part of that approach.
So, here is the question: When was the last time that you, as a trustee, chief officer or manager of a charity undertook a risk assessment of your organisation?
Using a risk management approach, you can look at the risks to your finances. Do you have enough reserves? Are the systems and checks that you have in place sufficient to ensure you are in control of your finances? It gives you the opportunity to have a think about fundraising. Have you got a good spread of income from a number of sources or are you dependent on a couple of main sources? What is the risk that one or both of them could pull out? Risk Management helps you consider your people or fixed assets. How well do your insurance policies cover you? What happens if one of your key people leave?
Understanding and documenting your risks is the first part of the process. The next part is putting in place the actions to deal with the risks. If you only have one or two main donors, can you attract other funding to spread the risk? Can you do more to ensure your donors value your work and thereby reduce the risk of them cutting spending?
Finally, you have to review the risks and the actions on a regular basis. That doesn’t mean every week, but getting into the habit of reviewing your corporate risk register at your board meetings is good governance.
It brings to mind the Scout’s motto: Be prepared. That is what risk management is … being prepared.