On the Ascent: Aspiring to Apply Nonprofit Risk Management
When a leader begins to apply nonprofit risk management, they get a chance to emerge from a fog of anxiety. They yearn for greater clarity and peace of mind, and they want to know more.
If you’re at this stage, it’s time to ASPIRE to greater heights.
Stage 2 – Aspire
How do you know if you’re at this stage? If you’re at the ASPIRE stage of your Lean Risk Management journey, you know a few things right now:
Risk Management Is Necessary
First, you know that the nonprofit business model demands a risk management strategy. Nonprofits face so many challenges, and you need a process to confront uncertainty with confidence.
Risk Management Is a Best Practice
Second, you know that nonprofit best practices say that risk management is an essential part of strong governance. Standards in your jurisdiction may state the matter in different ways, but the message is always the same:
- Independent Sector, for instance, states that “the board members of the charitable organization are responsible for understanding the major risks to which the organization is exposed, reviewing those risks on a periodic basis, and ensuring that systems have been established to manage them.”
- The Standards for Excellence adopted by many states say that “organization should make every effort to manage risk and periodically assess the need for insurance coverage in light of the organization’s activities and its financial capacity.”
- The Principles and Practices adopted by many other jurisdictions use additional formulations. Kentucky’s version, for instance, states that “the risk management program provides a framework for balancing and understanding risks and for empowering staff and board to make good choices in addressing them. The nonprofit should identify and manage internal and external risks as they apply to its core assets: people, property, income, and goodwill.”
Risk Management Protects Against Blind Spots
Third, you know that risk management helps a nonprofit organization overcome unhealthy biases and blind spots. Human beings don’t like to acknowledge their worries, admit their mistakes, or disclose their hopes. The structure and routine of risk management helps healthy organizations avoid these cognitive traps.
The Basic Vocabulary Is Clear
Fourth, you know the basic vocabulary of risk management – uncertainty, threat, opportunity, and risk management process.
The Key Commitments for Success
Finally, a leader at this stage knows the core commitments necessary for effective nonprofit risk management. In our Lean Risk Management™ training, we call these the Nine Key Commitments™:
- Risk management is a process.
- Awareness trumps ignorance.
- Simple trumps complex.
- Mistakes are necessary, but making the same mistake time after time is not.
- We can never be perfect, but we can always improve.
- What gets measured gets done.
- To cement lasting commitment throughout the organization, risk management leadership must come from the top.
- Context is critical.
- All nonprofits need risk management goals.
As You Climb, You Have Guidance and Support
As you aspire to create clarity, peace of mind, and value in your organization using Lean Risk Management™, you don’t have to do it alone. By joining Nonprofits Build Strength Together (BeST), you get expert advice from Risk Alternatives and support from other nonprofits on the same path.
TOLLGATE OUT OF “ASPIRING” STAGE: A successful nonprofit leader emerges from the “ASPIRE” stage by talking to her senior staff about actually beginning to build a risk management process within her organization. From there, it’s on to AWARE, as we will describe in our next post.
Nonprofits Build Strength Together (BeST)
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