Did you know?
- People who work for small organisations are twice as likely to be hurt in an accident at work than people who work for larger organisations.
- Of victims of “acquaintance violence” 23% were assaulted by their organisation’s customers or clients.
- Voluntary sector workers are twice as likely to take their employers to an industrial tribunal as private sector workers.
- Three out of ten employees in the UK experience mental health problems at some stage in their working lives. Five percent are suffering from major depression at this moment.
- One hundred charities in London are likely to close through insolvency this year.
- There are 25,000 trustee groups in London. Sixty of these groups will pay from their own resources towards damages awarded in industrial tribunals and debts associated with their charity. This failure rate compares favourably with the private sector, but still needs attention.
All charities are now required to consider the risks facing their organisation and confirm in their annual report that they have done so. Many groups will have done this in a rush when the Charity Commission introduced this rule.
You should revisit the issue again now. Can you put it on the agenda for the next trustees’ meeting?
We show below a system for measuring risk that considers impact, how devastating an occurrence of the event would be to your organisation and the likelihood that the event will occur. This will help you decide what action to take.
Consider in detail the events that fit into the high impact, medium impact and high likelihood boxes. It will probably be uneconomic to consider the other boxes.
Consider the major risks that would prevent the charity from achieving its objectives. Do not be overwhelmed by minor risks. You should consult widely because people in different situations will know about different risks faced by the organisation. Talk to trustees, all staff, volunteers, users and funders.
There are several measures for identifying risk including brainstorming sessions and market analysis tools:
- SWOT looks at present Strengths and Weaknesses and future Opportunities and Threats.
- STEEPLE considers the Social, Technical, Economic, Environmental, Political, Legal and Ethical issues facing the organisation.
Another approach is to go through the index of one of the main voluntary sector books such as Just About Managing by Sandy Arondack or the Voluntary Sector Legal Handbook by Arondack and Sinclair Taylor. See the CASH-ONLINE Bookstore. Quality assurance systems like PQASSO identify and reduce risk. See CASHFACTS: PQASSO finance.
Consider internal factors:
- Governance, management committee policies and practice.
- Employment policies and practice.
- Volunteer policies and practice.
- Financial systems and controls.
- Health and safety.
- Services: quality and delivery systems.
Consider external factors:
- Laws: general like data protection or ones specific to your work e.g. the Children’s Act.
- Public awareness and sympathy: people are becoming less sympathetic to the homeless, for instance, and that could affect funding.
- Taxation: is your PAYE system adequate?
- Demand: under community care demand for some services has risen. Can you cope?
- Labour market: can you recruit and train the staff that you need?
- Technology: will other organisations adopt methods that are more competitive than yours?
There are six ways of responding to risk:
- Reduce: use policies, procedures and training. Fire drills and inspections reduce risk of fire and death.
- Avoid: stop doing the activity. Do not take on onerous contracts. Avoid writing comments that could put you in court.
- Accept: a charity taking on a short-life license on office premise is accepting that it will have to leave the building sooner rather than later.
- Transfer: insure and/or contract out some activities, for instance a sponsored bungee jump where someone else deals with the health and safety implications.
- Price: increase the charge to the funder to cover additional insurance/staffing. This could be relevant when working with violent clients.
- Exploit: a charity rescuing child slaves could exploit the risk factor its volunteers face in its fundraising.
Of course, a number of these approaches could be combined.
Risk and cost
The graph below shows the optimum position of risk management at reasonable cost. It considers both the low cost passive position where risks are likely to happen and high cost risk aversion where the organisation is likely to end up doing nothing!
The PDF version of this factsheet shows a risk register which should be the core of your risk management system. Make sure that named people are accountable for monitoring identified risks.
If you adopt a risk register your annual report could say: “The trustees have drawn-up a risk register which provides dates and details of actions to be taken to reduce risk. The charity also purchases a range of insurance policies”.
Last updated: Mon, Mar 31 2008 - 03:54:05 PM
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