12 Hallmarks of Nonprofit Risk Management

  

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I am fortunate to have spent some time with Melanie Lockwood Herman, Executive Director of The Nonprofit Risk Management Center in Leesburg, Virginia. Melanie has an extensive background providing risk management consulting to hundreds of non profit organizations all across the United States. They also run an annual risk management conference which is taking place this year in Philadelphia. Sunday to Tuesday, October 10-12, 2010 at the Loews Hotel in Philadelphia. I will be there and would encourage you to think about sending someone.

One of the projects Melanie has worked on was to develop the 12 Hallmarks of a Risk-Aware Nonprofit.  I found it intriguing and will share it with you along with my comments over the next few months.

Here are the 12 Hallmarks

1. Takes More Risks Than It Avoids
2. Heralds A Risk Management Champion
3. Guided By Reality, In Addition To Scary Headlines
4. Is Bold But Smart
5. Cultivates a ‘Can-Do’ Attitude Among Paid and Volunteer Staff
6. Sees The Whole Iceberg Not Just The Tip
7. Understands That Hindsight Isn’t 20:20, But It’s Better Than A Blindfold
8. Tells It Like It Is
9. Is Transparent With Insurance Partners
10. Values The Journey, Not Just The Destination
11. Engages The Board In Battle
12. Looks At Risk From Everyone’s Perspective

Introductory Comments of the 12 Hallmarks by Melanie Lockwood Herman

We can’t know what lies ahead, but we all want to be prepared. Some nonprofits are ready to respond to future events effectively and gracefully, while others stumble and fall. As mission-devoted leaders in our respective nonprofits, we have asked ourselves, “What is it about certain nonprofits that demonstrate the best practices in risk management?”

We have all seen them; we try to emulate them, and we learn by following in their footsteps. Sometimes our shoes fit, other times they do not. But in the process of following the same path, inevitably we journey closer to the gold standard of being a risk-aware nonprofit.

Over the past two years, the Nonprofit Risk Management Center convened and consulted risk management experts from the nonprofit sector to identify the hallmarks of a risk-aware nonprofit organization. With generous grant funding from the Travelers Foundation, over a dozen current and former experienced nonprofit and public entity executives helped identify 12 Hallmarks, along with practical strategies and tools to help turn your organization into one that manifests the hallmarks of a risk-aware nonprofit.

This Hallmarks tool developed by the Nonprofit Risk Management Center has three purposes:

• To inspire thoughtful risk-taking by nonprofit leaders
• To illuminate risk management Hallmarks common in risk-aware nonprofits, and
• To provide specific and practical guidance as well as ‘how-to’ insights for leaders seeking to strengthen risk management practices in their nonprofit organizations.

We invite you to examine these Hallmarks and consider how they can inspire action steps to strengthen your nonprofit’s risk-taking and risk management practices. Each Hallmark is followed by practical suggestions and additional resources to help you get started. After examining these Hallmarks you may decide to choose two, three or all, as goals for your nonprofit in the year(s) ahead. We believe, however, that every nonprofit must satisfy itself that it has adequately addressed each Hallmark, either by taking explicit action or by determining that no action is required for specific reasons. There is no reason why any nonprofit, irrespective of its size or mission, cannot address each of the Hallmarks and decide how best to improve its risk management practices in ways that are compatible with its needs.

We suggest five basic steps for developing sound decisions for your nonprofit in the face of continuing uncertainty:

1. Consider the consequences.
2. Consider the likelihood of those consequences.
3. Consider the odds.
4. Listen to your intuitions and experience.
5. Be wary!

Be as ambitious as suits the culture of your nonprofit. Keep in mind that you will never be alone in your journey to become a risk-aware organization. You have a friend and a resource in the Nonprofit Risk Management Center. Our mission is to help you achieve your risk management goals and we look forward to assisting you. www.nonprofitrisk.org

Please take a moment and leave a comment. Let me know what you think of these 12 hallmarks