“Risk” Doesn’t Have to Be a Four Letter Word

All organizations experience risk or have felt the effect of risk gone unchecked. Did a project fail, and you didn’t see it coming? Did an important opportunity go unrealized because the proper steps weren’t taken to capitalize on it? Then yes, risk has struck again!

Actively managing risk is the answer. You need to identify it, establish your tolerance, plan for it, and then act on the plan if the risk occurs.

So what is risk? On a global scale, risk can be thought of as any event that will affect the desired outcome of a project, program, organizational goal or other initiative. Risk can manifest itself in two ways: as a threat and as an opportunity. Are you looking out for both?

Risk as a Threat

We most commonly think of risk as a threat — in fact this is the most common way that risk is presented, and the connotation of the very word brings to mind images of dangerous elements which are meant to harm us. Identifying potential threats to your project will be the easier of the two ways to think about risk, although it may take some digging to identify more than just the obvious.

Risk as an Opportunity

Opportunity is a relatively new way to think about elements of risk, and often much more difficult to identify in an organizational project or program. But opportunity should not be ignored — great rewards can come to those who have the knack for seizing opportunity as it presents itself. By identifying opportunity early in the planning process, you can then position yourself early to recognize what steps may be needed to fully exploit it.

Here is an example: Your organization has taken on a project to increase its fundraising activities through the use of a new software product. The product reduces the amount of manpower needed for fundraising, but in early evaluations of the product, you realize that the software also will allow you to track internal data for better business metrics. By reallocating fundraising resources instead of eliminating them, you are able to increase fundraising as planned while improving higher level organizational goals through capitalizing on improved metrics. An “opportunity” has been realized.

Getting Started with Risk Management

When developing a strategy for any initiative, do you first define the ways in which your goals or desired outcomes may be affected? Early identification of risk is one of the key planning components for any work that you do. Some risks may arise during the course of a project. This can’t be helped. With careful planning, though, most risks can be identified before you begin the work. Here are some tips for getting started:

  1. The internal knowledgebase at your organization holds many keys to starting risk management. Talk to staff members about lessons learned from past development and project work. Have you documented past work well? Great! Dig into those documents and pull out the risks that had unintended effects on your intended outcomes.
  2. Now, write it all down in a risk register. Your register does not have to be complex, although depending on the project, some of them are! At its heart, the risk register is a concise list of project risks in which you have not only identified the risks, but also categorized them, identified who is responsible for them, and what plan you have to either reduce (threats) or exploit (opportunities) them. View a sample risk register.
  3. Are you working with an outside vendor on a project? Be sure to ask about a full risk management plan for your project. Experienced consultants will work with you early in the process to identify risks up front, and also to maintain a risk management plan and associated risk register throughout your project lifecycle. The risk management plan is a detailed document describing the process in which risk will be handled, the tolerance for risk (or risk appetite) of the organization, as well as expanded views on how contingency plans will be handled.

Why it Matters

Organizations that have defined strategies and are actively working toward increasing their reach — not only through fundraising, but also through increased mission goals and efforts to expand the knowledge around their causes — will encounter risk on several fronts. Increased use of technology and development of more complex tracking mechanisms can bring not only risks, but also rewards.

It comes down to managing projects in the most cost and time efficient manner possible and using resources in the best way to advance organizational goals. Every project stumble, or opportunity that goes unrealized, is a setback. In all nonprofit environments, large or small, there is no room for wasted time and effort, and planning for the unexpected is critical for success. All organizations experience risk, but if you identify, plan for and mitigate it, your organization will gain a competitive edge in moving your mission forward.

Dan Montagna

About Dan Montagna

Dan has over 10 years of experience in project coordination/management with multiple organizations and disciplines, including nonprofits, co-ops and state agencies. In his previous roll, Dan managed operations and development for a state program housed at the University of Massachusetts. This work exposed him to several local nonprofits which allowed him to gain knowledge about their needs, and ways in which to improve their operations and help meet their goals. What Dan enjoys most about the project management process is the ability to examine a problem, simplify it, and deliver the solution in a way that makes sense for all stakeholders to successfully move forward from that point. In addition to holding a bachelor’s degree from Westfield State College, Dan is enrolled in the Master’s program for Public Policy and Administration at the University of Massachusetts.

One comment

  1. Great post Dan. Thanks for including the Probability and Impact spreadsheet in the post above. Great way to establish risk tolerance for the project and to focus on those risks that have the highest likelihood and/or impact.

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  1. Risk Management: Probability & Impact Matrix | Craftsman Technology Group - […] Citation: The Probability and Impact Matrix provided in this post builds on the work of others. The matrix format…

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