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What is Nonprofit Risk?

What you don’t know, can’t expect, or can’t control will hurt you. The recent pandemic has shown us that. Nonprofit organizations that investigate what could go wrong, how bad it could be, and how to prevent or correct problems BEFORE they happen are more resilient when crises hit. This process is called Risk Management.

But let’s back up. What is “risk” actually?

The textbook definition of Risk is an unintended, unexpected or unwanted event or condition with a specific likelihood of occurrence that impedes a target objective. In other words, a bad thing that could wreck a mission.

What are examples of risks that nonprofits could be exposed to?

  • Big donor walks away
  • Lawsuit
  • Staff injury
  • Hacker breaches systems
  • Confidential data made public
  • Key staff member resigns
  • Egregious program error

… to name but a few.

Managing every possible risk imaginable is neither prudent nor effective. It requires resources to design, build and implement the controls necessary to reduce risk. Organizations need to focus on delivering the mission so prioritizing a short list of risks is a good approach. To learn more, contact us about our Nonprofit Financial Planning and Risk Management services.

Talk to the financial experts at Fairlight Advisors to learn more about managing your nonprofit’s investments. Schedule a free consultation today! 

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Fairlight Advisors

At Fairlight, we are uniquely positioned to combine our investment experience with a strong working knowledge of the nonprofit ecosystem in order to bring targeted and effective solutions to bear on today’s nonprofit needs. We work with both teams and individuals to manage risk and optimize investments so our clients’ time is free to continue their primary social mission. We’re hands-on, personal, and we get results.

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