THE NONPROFIT RISK BOOK: Finding and Managing Risk in Nonprofits and NGOs PDF
Preview THE NONPROFIT RISK BOOK: Finding and Managing Risk in Nonprofits and NGOs
Jesse Feiler, Gail B. Nayowith The Nonprofit Risk Book Jesse Feiler, Gail B. Nayowith The Nonprofit Risk Book Finding and Managing Risk in Nonprofits and NGOs PRESS ISBN 978-1-5015-1516-3 e-ISBN (PDF) 978-1-5015-0594-2 e-ISBN (EPUB) 978-1-5015-0600-0 Library of Congress Cataloging-in-Publication Data A CIP catalog record for this book has been applied for at the Library of Congress. Bibliographic information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie; detailed bibliographic data are available on the Internet at http://dnb.dnb.de. © 2017 Jesse Feiler, Gail B. Nayowith Published by Walter de Gruyter Inc., Boston/Berlin Printing and binding: CPI books GmbH, Leck ♾ Printed on acid-free paper Printed in Germany www.degruyter.com Acknowledgments We have been fortunate to have had help and assistance from many people over the years and particularly over the last year in which we have been working on the book and app. Our thanks go out to Jeff Pepper at De Gruyter for putting this book in mo- tion. Jeff has been instrumental in bringing a number of Jesse’s books to market, and it is great to be working with him again at De Gruyter. Also on the production side, Carole Jelen at Waterside Productions once again has guided the progress of the book, as have Jaya Dalal and Angie MacAllister’s team: they have truly made this book pos- sible. In addition, Chuck Edwards and his band of beta testers have been helpful in de- veloping the app, while Barbara Butler has also provided insight into important parts of the nonprofit world. Michelle Lawrence in London has helped with international information while Gary Miller and Daniel Starr helped with the New York City cultural scene. Bill Baccaglini and Jennifer Geiling were early thought partners on risk assess- ment and why it matters. The Human Services Council pushed our thinking on the sources of nonprofit risk and Gabby Sheely brought fresh insight into the process of enterprise risk planning. Frank and frequent discussions with Larian Angelo about operating risk in local government as contrasted with public universities and other nonprofits, filled an important conceptual gap. Contents Part I: Nonprofit Risk and Mitigation 1 Chapter 1: Thinking About Risk 3 What’s Special About Nonprofit Risk? 5 The Nonprofit Business Model Creates Risks for Many Nonprofit Organizations 5 6 Common Warning Signs of Underlying Risk 6 What Is Risk? 7 Types of Risk 8 Dimensions of Risk 8 Categories of Risk 9 5 Operating Risks in Key Organizational Pillars 9 Why Nonprofit Enterprise Risk Management Matters 9 Risk Profile 10 Appetite for Risk 11 Summary 11 Chapter 2: Getting Started with Enterprise Risk Management 13 Defining Enterprise Risk Management 13 Getting Started with Enterprise Risk Management 14 Teeing Up the ERM Planning Process 15 Stage 1. Readiness and Rollout 17 Step 1. Taking Stock of Your Organization and Its Readiness for ERM 17 Step 2. Find Champions and Build a Team 20 Step 3. Engage Managers, Staff, and Board in Risk Assessment 20 Step 4. Frame out the Process 22 Stage 2. Risk Identification and Assessment 22 Step 1. Risk Identification 23 Step 2. Risk Assessment 26 Step 3. Organize and Describe Risks 28 Tools for Risk Assessment 30 Likelihood/Impact Matrix 32 Moving to ERM Mitigation Planning 33 Summary 34 Chapter 3: Risk Mitigation Plan Development & Monitoring 35 Turning Your Risk Assessment into a Risk Mitigation Plan 36 Step 1. Develop an Enterprise Risk Policy that Describes the Overall Framework for ERM Activities 38 viii Contents Step 2. Use Tools to Develop Mitigation Action Plans (MAPs) to Manage Risk Management Activities 39 Step 3. Develop a Reporting Process to Monitor the Status and Completion of Risk Mitigation Activities 40 Step 4. Develop Indicators to Track and Report Risk, Summarize Mitigation Activities and Document Resolution 41 Step 5. Create a Schedule for Monitoring ERM Plan Implementation and Reviewing the Effectiveness of Mitigation Strategies 44 Creating a Risk Register and Risk Mitigation Log 45 Reporting and Mitigation Accountability Strategies 48 A Note on Residual Risk 48 Implementing Your ERM Plan and Monitoring Risk 48 Summary 50 Chapter 4: Making It Work 51 Getting Started 51 The Nonprofit Risk App 54 Navigation (Top Controls) 55 Tab Bar (Bottom Controls) 56 Readiness and Rollout 56 Risk Identification and Assessment 57 Building the Risk List 58 Turning the Risk List into a Risk Register 60 Risk Mitigation Plan Development & Monitoring 62 Summary 64 Part II: Nonprofit Operating Risk 65 Chapter 5: Programs & Services 67 Focusing on Mission 68 What to Watch For 69 Prevention 70 Mitigation 70 Providing Programming & Services 71 What to Watch For 71 Prevention 72 Serving the Public: Patrons, Audiences, and Clients 73 What to Watch For 73 Prevention 73 Working with Other Organizations 75 What to Watch For 75 Prevention 75 Contents ix Mitigation 76 Planning for Sustainability, Resizing, and the Future 76 What to Watch For 76 Prevention 77 Mitigation 78 Summary 78 Chapter 6: Personnel 79 Working for Good 79 Personnel in Action 80 What to Watch For 80 Conflicts of Interest 81 What to Watch For 81 Prevention 82 Conflicts of Role 83 What to Watch For 83 Prevention 83 Working with Management 84 What to Watch For 84 Prevention 84 Mitigation 85 Managing Credentials and Performance Appraisals 85 What to Watch For 86 Prevention 86 Summary 86 Chapter 7: Environment, Regulatory, and Compliance Issues 87 Managing in the Community and Operating Environments 87 What to Watch For 88 Prevention 89 Managing Compliance and Regulations 90 What to Watch For 90 Prevention 91 Responding to Catastrophic Environmental Risk 91 What to Watch For 92 Being Part of the Nonprofit Environment 92 What to Watch For 93 Prevention 93 Summary 94
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