Effective boards will identify and review the major risks to which the organisation is exposed and put in place systems to manage those risks.
Management Committees are responsible for safeguarding the organisation, its assets and third parties, including staff and volunteers. This requires being aware, not only of the current activities and circumstances of the organisation, but also being mindful of what could happen in the future in order to minimise any potential negative impact on the organisation. Assessing and managing these risks is key for any Management Committee wishing to demonstrate effective management and accountability. Under Accounting and Reporting by Charities – Statement of Recommended Practice (SORP), trustees are required to make a statement confirming that “the major risks to which the charity is exposed, as identified by the trustees, have been reviewed and systems have been established to manage those risks”.
A Management Committee should be in a position to state that:
By doing so, they are demonstrating to funders, supporters and other stakeholders that they are taking a responsible, considered approach to managing the organisation and its assets. It should also be reassuring to Management Committee members themselves as they are able to identify developments that could threaten their ability to perform their role effectively or could expose them to liabilities.
Risk describes the uncertainty surrounding events and their outcomes that may have a significant effect, either positive or negative, on:
No activity is risk free. Every action we take, from crossing the road to trying something for the first time, is a calculated risk. Even with good planning it may be impossible to eliminate the risks from any activity. However if something does go wrong, the existence of an effective risk management strategy should help to lessen the impact.
Download template: Risk Assessment Template – Small Organisation
Download template: Risk Assessment Template – Large Organisation
Download worksheet: Identifying Risk (Step 1)
Download worksheet: Rating Risk (Step 2)
NICVA – Advice Note on Risk Assessment
For more information on risk management click here.