Hallmarks of a Risk-Aware Nonprofit

Hallmark #6: Sees the Whole Iceberg Not Just the Tip

The Challenge

Every organization encounters risks that are easily visible to the general public. These risks are just the tip of the iceberg: an injury to a vulnerable client; an accounting nightmare when grant funds are misapplied; or the unintentional breach of a contract with a government funder. But there are deeper, less obvious risks—whose neglect is likely to be catastrophic for the nonprofit. Is your nonprofit seeing the whole iceberg or just the tip?

Perhaps you are shaking your head: “Risks that are known can be managed. Risks that are unknown, cannot.” True or false?

Organizations with a healthy risk management perspective and a committed risk management champion do not just anticipate known risks; they anticipate the unknown. Managing unknown risks can be as simple as ensuring that the organization keeps its key employees and volunteers informed of emerging issues that will challenge the organization in the future. What are the risks associated with those emerging issues? What is happening at peer organizations or in comparable industries (e.g., housing, mental health, community development) that might affect your organization in the future?

By constantly being on the ‘look out’ for risks that may become relevant, the organization can be as prepared as possible even for the unknown. Looking out for the ‘next big risk’ is a mind-set – that is all it may take to manage unknown risk. An organization that sees the whole iceberg will adjust in time, and sail into calmer seas.

The Process

To demonstrate that your nonprofit sees the whole iceberg and not just the tip, your nonprofit will:

  1. Consciously include risk management as an essential element whenever the nonprofit engages in future planning.
  2. Conduct a self-assessment of risks or engage an outside expert to conduct a risk assessment connected with current activities and that are likely if programs and activities expand.
  3. Educate board and staff at every opportunity about risk management.