In this time of considerable change in the NFP sector, Governance and Risk Management have stepped up a notch in importance. The Governance Institute have put out a useful booklet on Risk Management for Directors. While much of the focus is on directors of private companies, most of the content is equally relevant to board members of Not-for-Profit organisations – the legal and ethical responsibilities are very similar.
Ultimately the board has responsibility for deciding what kinds and what levels of risk are acceptable for the organisation and then ensuring that management stays within those guidelines. Internal audit systems should manage and control risk and raise alerts for any activity outside the agreed parameters. Risk analysis is a key part of strategic planning to ensure that strategies are developed to assess and actively manage risks and avoid unacceptable risk.
Where to Start with Risk Mitigation
- Having the right reporting systems in place is a key part of managing these risks.
- Simply comparing actual results to budgets will provide a clear benchmark.
- The use of KPIs (especially those based on non-financial metrics) helps to highlight performance in key areas of concern and provide early alerts of impending issues.
The practice of regular reporting on the right benchmarks is vital for Boards to contain risks and execute their responsibilities. The handbook offered by the Governance Institute of Australia is a timely reminder and guide to getting this balance right.
Calxa has a range of reports that will help Board Members to govern with confidence.
Budget vs Actuals
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