Organizational Risk is a Board Priority
When first entering social work, I found myself ignorant to the concept of risk prevention. In fact, the biggest risk I felt was “Will I be able to live off of a social worker’s salary?” and I wasn’t even living in New York City yet! Risk prevention sounded like an administrative function: one that I would not need to be involved with. After all, I would be saving the world as a therapist.
Shortly after I began this journey, I had two important realizations: I would not be saving the world, and I could get sued. Fortunately, neither of these realizations came to me the hard way. I learned these lessons through ongoing experience in the field and a gradual move away from clinical work and into administration.
During that time I received my clinical license in Louisiana. Recognizing all of the hard work it took to achieve, I wanted to make sure that I always represented my social work profession with integrity. This was my introduction to risk prevention; I would never want my license to be jeopardized, not to mention putting my clients in harms’ way. This, at a basic level, is risk prevention.
Living and working in New Orleans during the time of Hurricane Katrina was a devastating yet awesome reminder of how strong risk prevention practices are crucial during the unimaginable. Of course the safety and well-being of clients and staff were top priority, we also had to deal with an inability to connect with consumers, destruction of records, loss of facilities, difficulties with locating key staff, and a halt in revenue. This experience was definitely the hard way that many organizations learned about the importance of preventing organizational risk to the fullest extent possible.
My awareness of risk prevention only increased from there. Moving into management and then senior leadership, all decisions required looking at choices through the lens of risk prevention and sustainability for the organization. Some of the common areas to consider are finances and human resources. These broad categories often open organizations up to risk, whether it’s financial sustainability, adhering to quickly changing laws and regulations, or maintaining adequate internal controls. Of course, there are other not-so easily recognized areas of risk such as public image, data security, contract monitoring, and alignment of mission just to name a few.
In my role at the Council on Accreditation, I have the opportunity to work with organizations of various sizes in applying evidence-informed standards in risk management to their operations. The standards provide a framework for establishing a comprehensive system that leaves nothing out.
Where does the role of the Board of Directors come in? Fortunately, this group of volunteers would normally not have to carry out the initiatives of risk prevention to the same degree as the paid leadership of the organization. The Board is expected, however, to be aware of crucial indicators that provide a context for how well the organization assesses, plans, monitors, and responds to risk, regardless of the type of non-profit organization. This information, when clearly articulated and understood, will guide you in making knowledgeable decisions on behalf of the community. Ultimately, it’s these types of decisions that foster long-standing organizations in the fulfillment of mission-focused outcomes.
The key is to have enough information to make appropriate decisions, but not too much information to get caught up in the day-to-day of the organization. You may want to start by identifying 5-10 indicators that you can request from your organization’s leadership to track on a monthly basis. Many are indicators that they are probably already tracking. A risk prevention dashboard can pull this information together so you can review it as it truly exists: interrelatedly. Sometimes, even just the absence or presence of the information can tell you a lot. For example, you can ask your organization how many days of operating cash are on hand at the end of every month. If the answer you get is, “We don’t collect that.”, then that can be very telling in itself. As board members, you need to know how the organization is prepared for the unexpected. Other indicators might include the number of consumer complaints or negative feedback, amount of accounts receivable past 60 days due, achievement of outcomes, and staff turnover.
Remember, the goal of this information is for decision making and ensuring that the organization is monitoring their risk. It’s not for board members to step into the staff management role.
Looking back, it is now hard to imagine how one can be involved in nonprofits without focusing on risk. Your organization exists for an important reason; don’t let the preventable stop you from achieving your mission.