Collaboration on Risk Management in the charity sector

We recently held a round table with large charity Finance Directors discussing risk management and collaboration across the sector. We polled and discussed a number of questions with interesting results…

 

How well does the sector collaborate on key issues?

 

It was agreed that collaboration has increased over the past 5 years, with more knowledge sharing, particularly on third party spending money and delivering impact. However, there is room for improvement with charities using their collective voice to bring about and drive change. Over the past 12 months, we have seen this focusing on issues related to the fallout of the pandemic and impact on fundraising. A popular and effective approach to improve collaboration can be achieved by bringing together charities and non-profits with similar causes, objectives and ambitions. Working together, they have more leverage and can collectively challenge the status quo, with more power to influence policy, negotiate or have more favourable term with suppliers.

%

of FD's agree there is room for more collaboration across the charity sector

So what prevents collaboration?

FD’s believe they are part of the issue, with a general reluctance or cautiousness to share risks and problems. Many charities consider others as competition, with consensus that a different approach is needed; working as allies. If there was an environment to encourage collaboration such as a forum or monthly meetings, this would help networking and nurturing relationships with other FD’s to create a more open conversation.

There is a misconception that collaboration means settling, missing out or not always being heard rather than an opportunity, with strength in numbers. There is much evidence that sharing information i.e. the props and cons of suppliers helps to avoid costly mistakes and reputational damage. Working together can also lighten workload for FD’s, sharing best practice documents and policies can save time and effort which can then be focused in other areas.

How well is risk understood at all levels in an organisation?

There is good understanding at board level. This could be due to there being many meanings of risk depending on the department worked in; organisational risk is different from risks services have for example. People below middle management are usually not familiar with the language associated to risk management causing there to be confusion. There needs to be a single risk definition taught throughout the organisation to refer to when planning projects and tenders. With a formalised understanding of risk and how to recognise them, it will be easier to put strategies and plans in place.    

%

of FD's agree there is a good level of understanding at a senior and board level but not further down the organisation

One reason risk is not a high priority, senior people in organisations do not think that certain risks will happen in their organisation causing them not to be highlighted. Middle management is the level risk needs to be taught because they can escalate them to the senior levels, as well as train the less senior levels to consider and spot risk in their day-to-day jobs.

A way to improve the understanding of risk is to share documentation to the full organisation to show everyone an overview of risks. By having open communication on the risks and how they fit into projects, this will help people understand the danger they could cause. Speaking about risks in weekly team meetings will help familiarise the wider team and adding a risk section to every business case will ensure people are considering how risks affect every project.

Has COVID-19 changed your organisations approach to risk management?

Most people agree that whilst risk management is vital, often other areas of their jobs are given higher priority making it difficult to engage employees and dedicating time for risk management.

COVID-19 presented a great opportunity to escalate risk management, strategies needed changing and home working raised new risks. Focus on risk from senior management has inevitably increased on due to the impact of COVID-19 and has highlighted the need for more agile plans to suit the new way of life. 

Disaster recovery was a key area that most FD’s needed to revisit and update throughout the pandemic. Many of the policies were implemented at the start of 2020 and no longer suitable, especially with offices reopening with new COVID measures. Lockdown was a period of reflection to embed better policies and actions in future planning with risk is a much bigger focus and priority in the coming year.

%

of FD's have recently reviewed their risk profile and made changes to their insurance policies

What could the sector do right now to collaborate better on Risk Management and how could this be implemented?

The sector needs to improve on building relationships and opening the conversation on how to support other organisations with risk management. Open and transparent communication is the only way to build these relationships and address common risks.

There are currently groups for larger charities to collaborate, which are usually anonymous, which can help to remove any judgement and encourage dialogue. To improve collaboration for all charities, there is an opportunity to create a group to reach a wider audience and encourage more collaboration. This should also help to address the stigma around poor risk management. 

Our round table demonstrated the opportunity for charities to work together to identify and mitigate common risks.

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