The first time I heard someone threaten to “put the fish on the table”, I was in a meeting discussing a processing error that resulted in a million-dollar loss to the firm. The statement conjured up an image of a rotting fish in the middle of the conference table, no one able to look away. In effect, that’s what my colleague wanted—for us to confront an uncomfortable truth about the risks to the organization.
As time went on, loads of colleagues were “putting fish on the table”, speaking honestly about organizational challenges and demonstrating their commitment to a culture of risk management.
Despite the benefits of enterprise risk management, few nonprofit organizations have mature or robust risk management in place as we described in an earlier post. So how does an organization start? Let’s start with that fish. Or literally a Fishbone.
The Fishbone Diagram, or Ishikawa, is a powerful tool for uncovering problems and sorting them into valuable categories. Named after Dr. Kaoru Ishikawa, an engineering professor at the University of Japan, the Fishbone Diagram helps organizations understand potential failures or weaknesses in a visually effective way.
A Fishbone is created by showing 1) a potential organizational failure at the diagram’s fish head, 2) major causes of the failure as ribs of the fish and 3) root-causes as tiny bones shooting off the ribs. Below is a simple example of a Fishbone Diagram in action using risk categories from the Community Resource Exchange’s Fitness Test (CREFT).
The Fishbone above analyzes different ways an organization might experience a loss or revenue gap of over $100K, which is indicated at the fish head. Root causes are proposed for every major bucket of risk. Notice that the Personnel & Administration bucket also explores the sub-causes of staff turnover. These sub-causes can be “leading indicators” of risk. Leading indicators change BEFORE a risk manifests a negative impact to the organization. Lagging indicators change AFTER a risk manifests a negative impact.
Using an example from the above Fishbone, evaluating the competitiveness of staff compensation packages (leading indicator) to determine whether an organization will be appropriately staffed is far more effective than monitoring staff turnover (lagging indicator).
The Fishbone exercise can be customized to the organization’s operating style and culture. For organizations that are large and complex, where a great deal of input is required, Fishbones can be completed at the departmental level, with results collected and compiled over time. Smaller organizations can complete a Fishbone together during a one-time interactive workshop.
There are a couple fundamental considerations when constructing a Fishbone to make it successful. First, it’s critical to gather input from a diverse population of engaged sources, for example leadership, staff, board members, volunteers, and even critical partners and vendors, if appropriate. Second, the more detailed a risk is described—both the cause and effect—the easier it becomes to address those risks. And third, when the Fishbone is completed, record all responses in a risk register as the organization will need them for the next phases of risk management!
To learn more, look out for our next article on the basic strategies of risk management.
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