Risk Management Guide 2017: How’s Your Appetite?

nonprofit-timesEngaging the Board in Risk Oversight

Melanie Herman | The Nonprofit Times

Nonprofit missions are potentially bolstered — and threatened — by risk. When you decide to take a mission-advancing risk, wonderful outcomes as well as costly unintended consequences are possible.

A growing number of nonprofit leaders are comfortable and accustomed to weighing the potential “what ifs” that lurk in the background of routine decisions as well as bold moves. But as a staff leader, should you bear the burden of risk alone? If it makes sense to divulge your risk worries with the board, are you inadvertently inviting board involvement in day-to-day operations? Is there an appropriate, governance-level risk role for your board that will keep it focused on the direction of the organization and its strategies priorities and opportunities?

There is a dramatic evolution of board interest in risk, accompanied by a sincere desire to provide proper oversight of risk-taking and risk management. Today’s nonprofit board members are keen to talk about the implications of risk to a charitable mission.

One possible reason for the growing interest in risk is the presence of senior business leaders on nonprofit boards who often bring professional experience in risk management from financial services, healthcare and other highly regulated industries. Another motivation for board interest is the sense that the world in which nonprofits operate is increasingly complex and dangerous.

From the risk of a privacy breach, to the risk of serious harm suffered by staff working at remote locations across the globe, savvy and supportive board members recognize that poorly understood or mismanaged risks have the potential to erode a potent reputation built over many decades of service to the community.

Continue reading for risk oversight activities your board might include.

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