The Board’s Role in Risk Management

Risk management is the proactive process of managing the dangers that threaten an organization. These dangers, fire, theft, employment issues, liability, and many others, if ignored or handled improperly, may destroy or severely affect the nonprofit’s ability to function. However, an organization can address these issues effectively through the Board’s commitment to risk management.

The Board is ultimately responsible for the organization and the achievement of its mission. Therefore, the board must act to conserve and protect the assets of the organization. Board actions to incorporate risk management into the fabric of the organization will meet this responsibility.

Suggestions

  1. Integrate the five steps of risk management into all of the board’s actions.
    • Identify and analyze the dangers or risks
    • Identify the various means for addressing the dangers
    • Select the appropriate alternatives
    • Implement the decisions
    • Monitor and revise as needed.
  2. Establish a Risk Management Committee responsible for developing and overseeing the organization’s risk management program.
  3. Adopt a Risk Management Policy that affirms the organization’s commitment to safeguarding its personnel and financial assets. The policy should complement the organization’s mission.

Risk management is only successful if everyone shares in the commitment and works to protect the organization. The board’s leadership in this endeavor will be modeled throughout the organization. All stakeholders will be encouraged, if not required, to work to protect and conserve the organization’s programs.

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