As the stewards of charities, boards of nonprofits must take measures to assess and limit risk. A risk assessment will help you assess and rank the risks of your organization, as well as the likelihood that they will occur and their impact on operations. You can make a risk log or use scenario planning to rank your risks and make educated decisions on how to minimize, avoid or eliminate them.
Non-profit organizations face unique challenges when it comes to assessing and managing risk. While for-profit companies have similar concerns, like employee training and cutting down on liability, nonprofits have to also be vigilant about safeguarding donors’ contributions of both time and money. This means that the potential risk of data breaches, budget shortages, as well as political instability are as relevant for nonprofits as they are for businesses that are for profit.
This article provides a three-step method to help you move from reactive to pro-active, protecting your mission in the long run. The basic steps are the exact same, regardless of the size or level of expertise of your nonprofit.
Start by identifying the risks your nonprofit Streamlining M&A Due Diligence: The Power of Virtual Data Rooms is confronting. This includes everything from a shrinking reserve ratio to the way your staff handles passwords. During this stage make sure that no department be left unaffected by your scrutiny: accounting and finance IT, donor relations, engineering, human resources, and public relations. Consider how a negative incident could affect each of these areas. This includes scheduling, costs and projects as well as long-term campaigns. Then, consider the probability of each danger and how much damage could be incurred if it happens.
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