Risk Assessment for Nonprofits

As the guardians of charitable organizations the board members of nonprofit organizations must take steps to assess and mitigate the risk. A risk assessment can help you to identify and rank your company’s risks as well as their likelihood of occurrence and impact on the operations. You can then develop an inventory of risks or scenario planning to help you rank your risk and make informed decisions regarding avoiding, reducing, or eliminating them.

Nonprofits have unique challenges in assessing and managing https://boardroomideas.info/how-to-reap-tangible-business-benefits-from-esg-strategy-development/ risk. Nonprofits have unique challenges when it is about assessing and managing risks. For-profit companies face the same concerns as employees’ training and liability reduction, however nonprofits must also protect the time and money of donors. Data leaks, funding shortages and political turmoil can be as relevant for nonprofits as for companies that are for-profit.

This article outlines a three-step method to aid you in transitioning from reactive to pro-active, protecting your mission in the long run. Whatever the size of your nonprofit or level of expertise, the basic steps are the same.

Begin by identifying any risks that your organization is exposed to. This includes everything from a declining reserve ratio to the way your staff handles passwords. In this stage be sure that no department go unnoticed. This includes accounting and finance IT, engineering, donor relations human resources, public relations. Think about how a negative event could impact each of these areas. This includes scheduling, costs and projects as well as long-term campaigns. Then, evaluate the probability of each danger and how much damage could be caused if it happens.