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How charities can rethink risk this #UKCharityWeek

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Judith Miller, Partner, Sayer Vincent

To mark #UKCharityWeek we’d like to highlight the big strategic risks facing charities this year and offer advice on how to tackle them.

In 2016, Sayer Vincent published ‘Rethinking Risk’ – a guide focused on how charities could achieve better governance by addressing the “Big Five” headline strategic risks, rather than their boards getting bogged down in risk registers, with multiple risks and often complex scoring methodology.

The guide defines the top risks as: Impact, Financial Sustainability, Compliance, Reputation, plus a fifth risk that might be specific to the nature of the charity’s work. For example, child protection would be a major risk area for a children’s charity.  A sixth risk area of ‘Culture’ could be added to this list, as culture and people have emerged as a major risk area for boards and management teams.

#UKCharityWeek is a good time to remind charity trustees of their risk management responsibilities. We want to move charities away from ‘tick box’ risks registers and instead help them manage the really big strategic risks that could impact their governance, finances and reputations.

This year, culture has emerged as another big risk for boards. This is leading many charities to review all aspects of their culture including their leadership, behaviour, their organisational values, how they communicate to staff, volunteers and beneficiaries, as well as their policies and procedures, as all are key components of a good risk culture.

Here are key strategic questions charities can consider which could help them mitigate the key strategic risks.

  1. Impact – Are you making the desired impact in support of your beneficiaries and can you evidence it? Are you talking about impact adequately in your annual report? Are you sharing what good looks like in the form of your KPIs? Also, in the spirit transparency, are you sharing your successes as well your lessons learned?
  1. Financial Sustainability – Does your operating model allow you to make an impact into the medium and longer term? Are you getting the financial information you need to enable you to make this judgement?
  1. Compliance – Are you meeting compliance requirements? In particular, how are you tackling the increased fundraising regulation? Is GDPR firmly on your organisation’s agenda? Has your board considered the refreshed Charity Governance Code and how is your charity performing against it?
  1. Reputation – Are you able to respond effectively to any incident that could result in damage to your reputation?
  1. Culture – How healthy is your organisational culture? Are your values reflected in the way in which your organisation actually goes about its work? Could your KPIs be driving behaviours that conflict with your values?”

For more advice, please download a copy of Rethinking risk or visit our blog.