Risk Management For Charities
- barboramatusinska
- May 22
- 2 min read
One of fundamental aspects of good governance is establishing and maintaining a robust risk management process.
Risk management means more than just keeping a risk register; it means continuous effort that includes analysing risks and taking mitigating actions in order to reduce the likelihood of their occurring, as well as proactively identifying emerging threats.
Charities in Ireland face diverse risks that can impact their ability to achieve their charitable objectives, maintain their reputation, and comply with legal and regulatory requirements.
An effective risk management process typically involves the following stages:
1. Risk Identification:
Understand the charity's objectives, activities, stakeholders, and the internal and external environment.
Involve all relevant stakeholders in identifying potential risks across all areas of the charity's operations.
Consider various categories of risk, including:
Governance Risks
Strategic Risks
Compliance Risks
Operational Risks
Financial Risks
Environmental Risks
Reputational Risks
Document all identified risks in a risk register. This register should include a clear description of each risk, including potential causes and consequences.
2. Risk Assessment:
Determine the likelihood of each identified risk and its possible impact.
Based on the assessment of likelihood and impact, prioritise risks to determine which require the most urgent attention. Risks with a high likelihood and high impact should be prioritised.
3. Risk Treatment:
Develop strategies to reduce the likelihood of the risk occurring or minimise its potential impact.
Clearly assign responsibility for implementing and monitoring each risk treatment to specific individuals or teams within the charity.
Set realistic timelines for implementing risk mitigation actions.
4. Risk Monitoring and Review:
Continuously monitor the identified risks and the effectiveness of mitigation strategies. This should be a standing item on the agenda for board meetings.
Periodically review the overall risk management process. This assessment should include reassessing risks, determining the effectiveness of controls, and detecting any new or developing risks.
Regularly report on key risks and risk management effectiveness to the board of trustees.
Effective risk management protects the charity’s assets, ensures compliance and it is a crucial component of strong governance. It supports decision making by providing trustees with a clear understanding of potential threats and opportunities. Effective risk management demonstrates to stakeholders that the charity is well managed and accountable.
Should you require any advice on charity services, please get in touch with a member of our team.
