A half-dozen traps to avoid

January 19, 2015       The NonProfit Times      

Risk management is such an acute concern that many managers, in their desire to minimize or prevent problems, actually cause them or makes easier to occur. The desire that everything go right all the time is a good one, but it can lead nonprofit managers astray.

During the 2014 Nonprofit Risk Summit, Diana Del Bel Belluz, of Risk Wise Inc., said there are serious but identifiable traps that leaders fall into that actually destroy risk management rather than enhancing it. Her “Traps That Sink Risk Management”:

  • Failure is not allowed. Nobody wants to admit failure, but transparency is required. And, mistakes happen.
  • Do as I say, not as I do. Certain positions in a hierarchy might, over time, be exempted from basic rules, or leaders might perceive themselves to be exempt. This can work strongly against good risk-management practices.
  • Risk management is someone else’s responsibility. Anyone who is accountable for objectives needs to be managing the risks to those objectives.
  • Risk is something to be avoided. Risk and reward are inextricably linked.
  • What, Me Worry? The warning signs of complacency: “It’s never happened before,” “It can’t happen here,” “We can handle it, no need to prepare,” “Ignore it and it will go away.”
  • Ignorance is bliss. “No news is good news,” Don’t invite Bill, he always finds problems” and “We can’t say that” are not good policies. They are warning signs. As are failing to ask: “What risks haven’t we taken/opportunities did we miss?”