As philanthropy seeks to achieve more impact with its investments, many funders are neither adequately defining their appetite for risk nor implementing risk management policies and practices accordingly. This can result in unexpected challenges during project implementation that compromise impact, but more often, it means funders shy away from taking on initiatives that could offer big payoffs because they are unclear about their own risk appetite and mitigation strategies. Calculated risk taking is essential to the success of philanthropy, and fear of risk should not stop a funder from making those big bets. Instead, smartly exploring those risks can, in many circumstances, lead to innovation, unexpected benefits, and outsized impact.

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