Risk management is a process for identifying, assessing, and prioritizing risks of different kinds. All companies experience risk so it is important to have a dedicated team to managing these risks to help protect your company. Once the risks are identified, the risk manager will create a plan to minimize or eliminate the impact of negative events. A variety of strategies are available, depending on the type of risk and the type of business. Through the risk management, an organization reviews its susceptibility to unexpected losses, and then develops strategies either to prevent losses from happening, or to reduce damage and expense when they do.
Nonprofit organizations deal with risk management differently than any other type of business because they have different priorities. Nonprofit organizations without risk management plans leave themselves vulnerable to events that could entirely shut down their operations. Bad things happen to good nonprofit organizations every day so taking the proper precautions will help minimize any trouble that the organization could face.
Some common risks include things like accidents in the workplace, fires, tornadoes, earthquakes, and other natural disasters. It can also include legal risks like fraud, theft, and sexual harassment lawsuits. Risks can also relate to business practices, uncertainty in financial markets, failures in projects, credit risks, or the security and storage of data and records.
The first step in managing risk is to identify it. The basic task of risk assessment is to identify all the actions and relationships of an organization that possibly could go wrong. Begin by considering all of the actions that your organization must perform in order to carry out its mission. Within all of your organization’s actions, there exists the possibility that an unplanned event or error may occur that could put your resources and assets in jeopardy.
Find out how Cornell can help your organization managing risk by downloading our White Paper.