Risk Management

Every nonprofit must try to maximize the good it does while also understanding and managing its risks. Balancing these can be a challenge because of the passion that nonprofit leaders – both board and staff – feel for the organization and its mission.

Risk management is not easy but a few things can help a lot: creating a risk tolerance statement, scenario planning, benchmarking and self-rating, setting explicit financial stability targets, creating continuity plans (i.e. living wills) etc. Nonprofits must ensure that well thought through risk management processes are in place. Trustees must recognize that risk management is inherent in their duties of care, obedience, and loyalty. Nonprofits serious about risk management may find the following resources helpful.