Nonprofit Risk Management is a vital component to any charity organization’s success. While a variety of exposures exist, assessing and managing these threats should be a top priority. Especially after so many government cuts, these practices can help to ensure survival.
The most common types are critical risks, insurance risks, routine risks, and risks of low importance. Critical risks include those that could potentially have a high probability of critical impact on the organization and requires management to resolve the issue swiftly. Insurance Risks are those risks that are not likely to occur, but if they did, could have severe penalties.
Contrarily, routine risks involve minor threats that occur often such as human errors with procedures. Lastly, low importance risks are characterized by low occurrence levels and low potential impact on the business.
In order to mitigate these risks, both probability and impact must be taken into consideration. According to Know How Nonprofit, high probability risks might occur every one to two years, medium probability risks might occur once every three to five years, and low probability risks might occur less frequently than once in five years.
In addition, the impact of the risk must be measured. High risks could result in a halt of services whereas low impact risks can be easily managed. Further, identify actions that could potentially eliminate risk in the workplace and within procedures. Bear in mind that carrying insurance coverage to protect against the financial obligations and litigation fees that could ensue from a misstep is recommended. Next, evaluate the lower, less threatening risks to see if it could potentially develop into something more ominous.
At Charity First, we specialize in protecting nonprofit organizations. We understand the broad scope of risks that they face on a daily basis and strive to provide adequate coverage to combat these perils. To learn more about our products, contact us today at (800) 352-2761.