Risk is the likelihood that an event will occur that will cause an undesirable effect. Risk management refers to steps taken to try to prevent that event from happening or from causing damage.
Perception of risk is relative and subjective. It lives in the eye of the beholder. As a process that is used to protect what you care about, in the philanthropic sector, risk management traditionally focuses on protecting assets and reputation. One thing it has traditionally not been used for is a deliberate process to protect impact. Because ‘risk management’ doesn’t mean one thing, it is important to define what you mean and what you are talking about when using this term.
This guide includes the four most common uses of the term ‘risk management’ in the philanthropic sector:
- Legal Compliance
- Financial Best Practices
- Safety & Security
- Ensuring Impact