In our last post, we described how a nonprofit can perform its first risk inventory. Here, we follow that by discussing what you should do with the results.
Meet to Discuss the Results
After your team members perform their independent analyses, compile the results. Share them with the team. Meet for discussion, focusing on one functional area at a time, then the external context. In addition, consider the following overarching questions:
- Which function drew the most participant consensus from the independent assessments? This functional area may have the greatest potential for short-term results, since the team seems to know what needs to be.
- In which function did the participants identify the greatest number of threats and opportunities? This function may be the area of greatest potential growth.
- In what function did some participants identify many significant issues and feel constrained by the number of risks they could identify while others struggled to identify any at all? The divergence of opinion may suggest that different team members are applying widely different subjective metrics to performance in that area.
- In which function did participants identify the most threats? This function keeps people up at night, which is a key insight for senior management.
- In which functions were the greatest number of opportunities identified? This function might be the organizational sandbox, where team members may want to play. Finally,
- Is there consensus about potential external influences, or do views diverge? Having a shared sense of context is critical.
When performing your first risk inventory, keep the following six considerations in mind.
You can’t do everything at once. Your team will find more threats and opportunities than your organization could reasonably address at one time. (You can find additional resources about the next step in risk management – prioritizing and creating a “risk register” – on our blog, at risk-alternatives. com.)
Some threats and opportunities aren’t really there. During an initial risk inventory, participants will list “threats” and “opportunities” that won’t survive scrutiny. No one has all the facts, and personal biases and misinformation could cause your team members to identify false issues.
Some issues will need redefinition. Important issues may be ill-defined. Your team should work toward defining each risk so that everyone understands the scope and nature of the issue before developing responses. (We will address this topic in greater depth in an upcoming post.)
Your risk inventory is an incomplete list and will change every time you do it. Your team won’t identify every risk facing the organization. Risk is a living, changing force within your nonprofit. By conducting periodic risk inventories, your organization can position itself to strengthen and grow.
Expect emotions. Risk inventories may generate a variety of different emotions. Strong positive emotions are common. Participants may feel energized by the clarity and excited about prospects. They may find that the organization faces fewer issues than they had feared. They may have greater peace of mind because they now know the challenges and opportunities facing the organization. They may feel more appreciated within their functions, and they may appreciate others within the organization more because they understand more about their challenges.
Risk inventories may generate negative emotions, too. An individual may feel frustrated that her complaints are only now being acknowledged. A long list of issues may feel overwhelming. Individuals may feel defensive, particularly when risks lie within their area of expertise.
People may also feel uncomfortable identifying problems that stem from others’ performance, or may want to vent about team members. In light of this dynamic, the leader of the risk inventory initiative may benefit from reviewing a resource on creating constructive conversations, like Susan Scott’s book Fierce Conversations, Karen Martin’s Clarity First, or Peter Senge’s The Fifth Discipline Fieldbook. Keep in mind, however, that those emotions simmered within your organization before you ever contemplated a risk inventory. Performing the inventory allows your team to surface those important emotions and have important conversations.
Your first risk inventory is just that – an important first step on the path to lean risk management. Follow up by prioritizing. Do the exercise again in six months. Learn from the differences over time.