The Nonprofit Risk Management Center
defines "risk" as "the possible deviation from what you expect to
occur." An effective nonprofit can't operate successfully without
taking risks. Risk is an inherent part of existence. Community-serving
nonprofits must accept varying degrees of risk in order to accomplish
their missions. Therefore, a risk management program doesn't seek to
eliminate all risk within an organization. Instead, it provides a
framework for balancing and understanding which risks are inherent
within the organization and for empowering staff to make good choices
in dealing with these risks.
The Center defines risk management
as "a discipline for dealing with uncertainty." From uncertainty about
continued funding for vital programs, to uncertainty about the
motivations of individuals seeking paid employment or volunteer service
opportunities, every nonprofit must confront risk on a day-to-day
basis. The key to a successful risk management program is to ensure
that the organization manages risk by design, and not by default. While
it's not possible to prevent a storm from brewing, there are many risks
that can be addressed through thoughtful planning and creative problem
solving.
