Risk Management for Non-Profit Boards

K. K. Biersdorff ConsultingSupporting Organizational Excellence &

Innovation

Risk Management for Non-Profit Boards

A Balanced Approach


Innovation

Life is full of surprises.

• Good surprises – benefit your organization.• Bad surprises – hurt your organization.• Risk management uses your resources and

activities to prevent or reduce losses and to make gains for your organization.

• Risk management puts you in control of what happens as much as possible.


Innovation

Common words used in Risk Management

• Risk – results of an action that are bad for the organization; what can go wrong.

• Negligence – if you fail to act responsibly; if you neglect your duty.

• Due diligence – doing what you must to make good, responsible choices.

• Liability – legal responsibility for mistakes that cause bad things to happen to people or property.


Innovation

How to do “risk management”

• Think about what could go wrong (risks) and what could go right (opportunities).

• Say which are the most important risks and benefits to prepare for.

• Plan what to do to reduce the risks and increase the benefits.

• Follow the plan and see how it works.


Innovation

Plan ahead so you can act fast.

• Make a list of what your organization does.– For each one, figure out what could go wrong.

• Is that likely or unlikely to happen?

• How bad would that be for your organization?

• If likely or costly, how can you make it less likely or less costly?

– For each one, figure out what could go right.• Is that likely or unlikely to happen?

• How good would that be for your organization?

• How can you make it more likely or more helpful for your organization?


Innovation

The Main Risks and Benefitsfor Organizations

• How does it affect your reputation?• What impact does it have on the safety

or well-being of your staff or members?

• How does it affect the money you have?• Does it help or keep you from fulfilling

your mission?


Innovation

The Main Ways Organizations Manage Risks and Benefits

• Ask outside experts for help

• Train people (staff, boards, membersor community)

• Policies and procedures (internal controls)

• Communicate with others (transfer liability)

• Safety equipment and tools

• Insurance

• Financial reserves (money in the bank)


Innovation

Common Risks and Ways Organizations Manage Them

Problems SolutionsStaff steal money • At least two people oversee the $

• Finances open to review & reviewed often

Staff break rules or laws • Screen when hiring (interview, check references, police check)• Train (reduce mistakes)• Supervise (answer questions, address issues as they arise, get to know them, monitor/review)• Have clear policies and procedures


Innovation


Problems Solutions

Office destroyed or computers crash

• Back up computer files and store away from office• Crisis management plan (emergency contact list, use cell phone, arrange temporary office)

Staff or board member dies, quits or is fired

• Crisis communication plan• Succession planning• Policies (hiring/firing process, working alone laws)


Innovation


Problems SolutionsStudents, visitors or members hurt while with you

• Screen, train and supervise staff• Communicate limits of responsibility• Waivers and release forms• Policies (can kick people out of activities)• Liability insurance

Damaging info about organization

• Train people about what to say and not say about the organization• Communication tools (like brochures)• Communication plan (including crisis communication plan)


Innovation

Special Risks for Organizations Working with “At Risk” People

• “At risk” includes people with intellectual disabilities or mental health issues, youth in contact with “the system.”

• Expectations of the Rehabilitation Field– See “at risk” people as likely to make poor

choices or as irresponsible– See the organization’s staff as caregivers:

expectation is to watch over people and prevent mischief/harm at organization events

• Board members from “at risk” populations in leadership roles and perceived liability


Innovation

Discussion Example• What if an out-of-town board member

uses travel assistance money made available to support board meeting participation to come to the city several days early to hang out in the bar with friends?– What could go wrong and how

could it affect your organization?• Safety or well-being of your

members/staff? • Reputation?• Money?• Mission fulfillment?

– How can you manage the risks?

Economy & Finance

Risk Management for Non-Profit Boards