Experience might be the best teacher, but experience has shown nonprofit leaders that waiting for a fiasco and then hiding under the desk is not the way to go.
Nonprofit manager are looking more toward preventing problems, and at the American Institute for CPAs (AICPA) Not-for-Profit Industry Conference, Mitchell Lewis and Bob Cummings presented details about enterprise risk management (ERM).
Lewis and Cummings said that both the Committee of Sponsoring Organizations (COSO) and the Institute of Internal Auditors (IIA) have their own definitions, but they offered this handy brief definition: Identifying, considering and developing responses to potential events, both internal and external to an organization, that might negatively impact an organization. They emphasized that it is not an internal audit.
The characteristics of an effective ERM are that it:
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