Risk Assessment for Nonprofits

As the guardians of charitable organizations Board members of nonprofit organizations should consider ways to assess and minimize risk. Risk assessments allow you to determine and rank your organization’s risks and their probability of occurring and impact on your operations. Then, you can create an inventory of risks or scenario planning to help you prioritize your risks and make informed choices regarding avoiding, reducing, or eliminating them.

Nonprofits are faced with unique challenges when it comes to assessing and managing risks. While for-profit companies have similar concerns, such as employee training and reducing liability, nonprofits must be mindful of protecting the contributions of donors, both time and money. Data breaches, funding shortages, and political turmoil can be more real for nonprofits than corporations that are for-profit.

This article offers a 3-step method to assist you in moving from reactive to pro-active and protect your mission in the long run. Regardless of your nonprofit’s size or experience, the fundamental steps are the same.

Start by identifying all of the threats your organization is facing. This can include everything from a decreasing reserve ratio to how your staff manages their passwords. During this stage ensure that no department escape your scrutiny: accounting and finance IT, donor relations, engineering, human resources, and public relations. Think about what a negative event virtual data room technology might look like for each of these areas, which includes cost, schedules, projects and long-term campaign. Assess the probability of each risk and figure out the extent of damage it can result in if it occurs.