Risk Management – What’s It About and Why Should You Care?

risk managementRisk Management

Have you ever thought there was something important you really should get done, but getting started amongst the load of other priorities on your plate just seemed overwhelming?  When it comes time to think about risk management, this is the case for many associations and not-for-profits.

We have created a series of blog posts planned to help you get started with risk management. If you have already made some risk management headway, the perspectives, tips and suggestions will help you to get more value from your investment in risk management.

What is risk?

For many people, as soon as they hear the word “risk” they think of something bad.  But risk is really about uncertainty. More specifically it is about uncertainty that matters – even more specifically an uncertainty that if it occurs could affect one or more of your objectives. And risk can be both good and bad.  So, your goal should be to understand what could happen both good and bad relevant to your objectives and take action.

For example, an objective for your association is to attract more members through social media.  But if you don’t have a team member with relevant social media skills then you have a risk, i.e. a risk you lack sufficient skills to reach new members through social media.

Why should you care about risk management?

The answer to this question may seem obvious – many would respond by saying risk management will help to avoid something bad that might happen.  But equally as important, risk management can help to minimize the impact of risks you must take to meet your objectives.

It is also important to realize we live in a period of unprecedented disruption – according to one source, the current rate of change is 10X that of the Industrial Revolution; change is happening at 300X the scale of the Industrial Revolution with roughly 3,000X the impact.  This rapid disruption creates risk.

Think about the taxi industry that was upended by Uber.  Remember going to Blockbuster for videos? Now it’s all about Netflix and streaming services.  Associations and not-for-profits are not immune to risk from rapid disruption.  Consider millennials:  it is recognized that they tend to shift around and support causes and organizations that solve problems they care about.  This is a shift from older donors or members who tended to sign on to a cause or organization and stay with it for the long-term.

It is now critical to be able to tell your impact story in this age of disruption.  If you can’t, there is a risk you might not be able to attract millennials because they won’t be able to see your organization’s impact.

In our next post on risk management, we’ll look at where organizations stand relevant to risk management and what might be driving the state of risk management in the coming year.

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Francis Liska
CEO OTUS Group | OTUS Group
Francis is a Chartered Professional Accountant, Certified General Accountant, Certified Information Systems Auditor, Certified Internal Control Auditor and a Certified Management Consultant. He holds a degree in Business Administration from Cape Breton University and a Post Graduate Diploma in Applied Information Technology. He has also completed graduate studies in decision analysis at Carleton University.

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