How to help your charity board navigate risk
- Managing risk is crucial for any charity board
- Building the right environment for your trustees to recognise and manage risk is key
- A new guide by the Association of Chairs shares insights and tips to help charities effectively negotiate risk
There is no escaping risk. It is part and parcel of running any organisation and covers a huge variety of situations, driven by internal and external factors.
From planning how to respond if bad weather affects an event, to being prepared for Brexit, or taking advantage of a new partnership, learning how to navigate risk and maximise opportunity is a core skill for your board as it steers your organisation forwards.
Time spent building a good framework and the right culture for identifying and managing risk is crucial, and a core part of the board’s role.
Getting risk management right
Too often, risk management is a form-filling exercise that fails to engage trustees. As a result, these boards fail to effectively understand and manage the charity’s risks.
Some boards micro-manage risk, focusing on everything that could go wrong. Scoring and ranking risk becomes an end in itself, and can create a false sense of control and security. This leads organisations to become so cautious they fail to act, which is itself a risk.
The challenge for chairs is to manage processes around risk. This means maintaining an accurate and realistic view of the risks and opportunities through regular discussions, awareness of the external environment and planning for possible scenarios.
The chair should guide the board to find a strategic and proportionate approach that makes the most of the opportunities, while managing the risks.
Avoiding challenges and pitfalls
A new briefing paper, produced by the Association of Chairs (AoC) as part of its ‘Chair’s Challenge Series’, aims to support the heads of charities in helping their boards to understand and focus on the strategic risks they face, and how to approach management of these risks. This includes the introduction of systems that give assurance that risk is being appropriately managed.
It also identifies common challenges and pitfalls and suggests how to deal with these.
Building an effective board
The chair’s role is to ensure the board embraces risk in a strategic way, so that it can make the most of opportunities while understanding and managing the risks involved, and ensure the decisions it takes are aligned with the goals of the organisation.
To achieve this, an effective board needs:
1. An appropriate culture with trustees acting in the right way.
2. Access to the right people.
3. Appropriate practices and processes in place.
The chair should enable the board to have informed, meaningful and challenging conversations about risk and opportunity. It’s the board’s role to weigh up key issues and dilemmas and make choices with an awareness of both the risks and rewards. Sometimes that means playing it safe, sometimes it means being bold.
Download the guide
You can download the Navigating Risk guide for free to find out more.