“Risk management is the process of managing an organisation’s potential exposure to liabilities, preventing their occurrence or providing funds to meet the costs of a liability, if it occurs.” – McGregor, Lowndes
Ignorance is not bliss nor is it a defence in court! Does your Not-For-Profit Group have up to date risk management?
What are some types of risks?
- Financial Risk
- Physical Risk
- Ethical or Moral Risk
- Legal Risk
What is… Duty of Care?
Duty of care is a requirement that a person acts towards others and the public with watchfulness, attention, caution and prudence that a reasonable person in the circumstances would. If a person’s actions do not meet this standard of care, then the acts are considered negligent and any damages resulting may be claimed in a lawsuit for negligence.
Not-for-profit organisations and officials have a duty of care to participants and members in activities where there is a reasonably foreseeable risk of harm or injury to participants as a result of their actions. In exercising this duty of care, the law requires officials to take reasonable steps to reduce the likelihood of injury to participants as a result of those risks which are foreseeable.
Is your Not-For-Profit Organisation at risk? See below for five basic steps to risk manage.
- Identify the Risk. Use the ‘what if process’:
- What if this happened?
- What do we have in place to make sure it does not happen?
- If it still happened, what do we have in place to minimise the effect?
- Evaluate the Risk. Determine the LIKELIHOOD of the risk occurring and the CONSEQUENCE. Match the likelihood and consequence to determine the level of risk. Use this to prioritise the treatment of risk with most severe risks treated first.
- Treat the Risk. Determine the best course of action to eliminate or avoid the risk by:
• Finding a substitute
• Separating people from the risk
• Controlling the risk
• Changing practices and providing training
• Using protective measures
• Transferring the risk (e.g. insurance)
- Implement the Risk Strategy. Develop an Action Plan, including:
• Physical changes to be made
• Policies and procedures to be developed
• Education to be provided
• Signs to be erected
• Advice to be sought
• Insurance required
- Evaluate the Plan. Create a team to undertake:
• Weekly checks
• Monthly audits
• Annual reviews
Remember to document accidents and incidents that occur and keep them on file for at least 7 years!
NFP House provides information and advisory services to not-for-profit (NFP) organisations. Any advice, information or data provided by NFP House does not constitute financial or legal recommendations and should not be relied upon for business decisions. Ownership of any decisions remains exclusively with the NFP organisation being assisted and should be made at their discretion, in consideration of all possible risk factors. NFP House shall not be liable or held liable for any consequence of decisions or actions made by NFP organisations being assisted.