As more and more nonprofit managers learn that risk is not something confined to the entity known as “Someone Else,” they might find that their own risk-prevention and risk-management policies are inadequate for modern-day contingencies.
Risk management is crucial, and at the AICPA Not-for-Profit Industry Conference, Mitchell Lewis, David McRoberts and William Mellon reviewed enterprise risk management (ERM). They explained that a risk management process is important, but they also said no organization should try to establish one over night. They advocated following a phased approach enhancing transparency and accountability in overall organization and structure. They also advised developing and maintaining a manageable risk and risk-event universe, and they cautioned that one size does not fit all.
They said that an ERM implementation process involves five phases:
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