Nonprofit Network Blog

Have You Done A Risk Assessment?

Thursday, August 13, 2020 2:47 PM | Tracey Wilson (Administrator)

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 Laura Fuller
 Capacity Builder

As I prepare for the workshop I am leading next month on Project Management Basics, I feel like we need to highlight a tool that nonprofits need to embrace right now, and that is doing a Risk Assessment.

For project managers, a risk assessment is a series of calculations to determine what things may be likely to derail your project.  The equation is simple. 

Risk = probability of something happening x the Impact of it happening. 

The people on the project team will list the "risks" and then assign a number from 0 to 5.  0 is no impact/probability and 5 is high impact/probability.  Anything 12+ is High, 6-9 is Medium, and 5 and below is Low Risk.

Let’s say you are planning an outside event in the fall.  A possible risk might be Bad Weather.  The probability of a storm or other bad weather in the fall in Michigan is fairly high, I’d say a 3.  Determine the impact, I'd say the impact of a storm on an outside event is fairly high, so I'll assign it a 5.  3 x 5= 15.  So we've determined Bad Weather is a High Risk Factor.  *Please note, at this step we are not looking for ways to mitigate a risk (that comes later!) we are only determining the risk.

12+ is High, 6-9 is Medium, and 5 and below is Low Risk.

Now, let’s say you’re planning a "Stream Clean Up" in the spring.  What’s the risk of not having enough volunteers to your event?  The impact of not having enough volunteers might be medium because you’d still manage to get some of the work done.  I’ll say a 2.  What are the chances of you not having enough volunteers?  Maybe also a 2?  2 x 2= 4.  Not having enough volunteers would be Low Risk.

So, why is this tool important for nonprofits right now?

Because we are in a time of unprecedented uncertainty for many organizations.  Thus, using a simple tool like this with your board allows you to rate the risk to various programs, funds, and events.  What is the Risk to your organization of losing a grant that your organization has counted on for years?  Ask the people on the board to use the 0-5 scale and ask them what the impact would be, and what the probability of it happening is.  If the Risk is high, then start now in trying to figure out what you need to do to mitigate that risk!  Perhaps a call to the donor before the application is due is in order to get more information on their funding priorities.  Perhaps it is time to cultivate other funding streams (hint: it is ALWAYS time to cultivate new donors!). 

Go through the list.  Assess your risks honestly, and use the scores to prioritize what you need to do NOW to keep your organization alive and afloat.

To discuss these scenarios and others further please join me on Wednesday September 2nd at 9 AM for our new workshop, Project Management Basics

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