Running a non-profit organization can sometimes be unpredictable, which is why you should always have a good risk management strategy in place. This is something that can easily be overlooked, especially when your daily operations are running smoothly.
In fact, a 2022 report from the North Carolina State University Enterprise Risk Management Initiative shows that only 28% of non-profits have a complete or organization-wide risk management process.
Before you implement a risk management strategy, you must conduct a risk assessment. There are some basic steps that you can take to conduct your risk assessment.
Three steps to conduct a risk assessment
First, identify the type of risks you may face. Some common risks non-profit organizations encounter involve compliance, cybersecurity violations and fraud. Consider which risks are most likely to impact your organization.
Next, analyze the impact these risks could have on your organization. The impacts could be financial loss, legal consequences or damage to your organization’s reputation. Some risks could affect your day-to-day operations, such as a cybersecurity attack that shuts down your technology.
Finally, after identifying the risks and determining the potential impact, prioritize the risks and decide which ones to address first. Risks that are most likely to occur or would have the most negative impact should generally receive higher priority.
Creating your risk management strategy
When you have completed your risk assessment, you are ready to put your risk management strategy into place. Your strategy should involve preventative measures and address exactly how you will respond in specific situations.
Risk management assessments should be conducted regularly. Your organization’s situation will change with time, and this means your risks may change. Regularly assessing your risks and updating your risk management strategy as appropriate can help your organization prevent or alleviate risks.