Source: Nonprofit Risk Management Center
When considering the myriad risks facing a nonprofit organization, one could identify many risks that should be safeguarded against, mitigated, or prevented if possible. Strategic risks are another animal altogether, or more appropriately, a garden of risks that—if properly tended to—will grow to fruition and advance the nonprofit’s mission and vision. Strategic risks are risks worth taking because they have the potential to offer a nonprofit team a significant return.
Who better to scope out and sketch strategy than a nonprofit’s board of directors—the mission stewards who possess a broad and top-down perspective of the organization? Board members shouldn’t be planting seeds and pulling weeds in the mission garden; they should be anticipating garden predators, changing weather conditions, and market conditions that affect demand for the programs and impact sown by your mission. To nurture desired outcomes of strategy, boards must tend to risk oversight; if this key duty is discharged, boards have the power to cultivate informed strategic risk-taking that will help a nonprofit’s mission flourish.
Nonprofit boards are increasingly keen to talk about the possibility of risk threatening—or bolstering—a charitable mission. At NRMC we are witnessing the evolution of board interest in the world of risk in breadth and depth. With respect to the breadth of risks a nonprofit faces, boards are stepping up to ask questions about strategic and enterprise-level risks—topics that extend far beyond the familiar garden walls of operational or preventable risks. On the subject of depth, a growing number of boards are requesting—if not insisting—that management teams engage with the board to understand their organization’s risk landscape and also provide periodic assurance that risks in the purview of staff have been assessed and addressed.
Garden variety risks facing nonprofits include accidents involving agency vehicles and drivers, injuries suffered by participants and volunteers, and employee theft. But truly forward-focused boards now understand that strategic risks pose the greatest threats and opportunities to their missions they support. Boardroom conversations about risks are less about the costs of safety measures, and more about the costs and rewards of making—or not making—bold moves.