It is good practice to carry out regular comprehensive assessments of all the risks faced by your organisation and to maintain a register of them. Many of these risks will be operational: delays or shortfalls in trading income, accidents, staff absences, mishandling of money, client abuse etc. Some risks will be strategic, in that they carry a threat to the long-term effectiveness or viability of the organisation.
In a funding crisis, it is vital to assess the strategic risks. Typically you would do so in terms of:
- Description of the risk
- Level of Probability that the situation will arise
- Level of Impact or consequence of the situation if it does arise
- Significance of the risk (probability multiplied by impact)
- Mitigation – action in advance to reduce the probability and/or the impact
- Contingency – your planned response if and when the situation arises
Scoring probability and impact each on a 5-point scale, for example, would give you a 25-point ranking scale for level of risk. (Some organisations use a traffic lights system: the most significant risks receive a red light etc.)
The main thing is to identify:
- What are the most serious risks you face?
- How serious and how urgent are they?
- What can you do to reduce the risks?
- If you’re already beyond that, what are your contingency plans?
You may wish to use our risk assessment template