Strategy

Wake up to risk

Governance | Ian Allsop | 5 Dec 2007

Ian Allsop explains why risk management is an ongoing process.

Risk management has moved on a great deal since Sorp 2000 first required trustees to make a risk statement, and is now embedded into the day-to-day running of most charities. Or is it?

New research from PKF and CFDG reveals that in reality, a lot of charities are concerned that their risk management is not as effective as it should be, being seen as no more than a paper exercise in some cases.

Other revealing statistics include the fact that a quarter of charities have experienced adverse publicity in the past two years and yet only 43 per cent have a response plan in place. And a startling 34 per cent claim that their premises had experienced an attempted break in over the same period, with over half experiencing theft or damage. This would leave a cynic to suggest that insurance fraud is being used as a new source of funding if it wasn’t for the fact we are talking about charities.

If something is worth doing it’s worth doing properly and such findings should come as a wake-up call to those charities that have become too comfortable with the concept of risk assessment as a tick-box exercise rather than a constructive and positive contributor to their organisation. It has to be an ongoing process to maintain momentum, rather than a once-a-year obligation, and has to be driven from the very top. Only 12 per cent of charities responding to the survey highlighted financial sustainability as their major worry compared with 59 per cent citing embedding risk management. Yet, if risk isn’t taken seriously and managed well, it is possible that financial sustainability could well become a headache for more charities, whether they are currently worried about it or not.

Ian Allsop is the editor of Charity Finance magazine

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