Risk Management
Philanthropy Ireland recently hosted a talk by Peadar Duffy of Risk Management International, on
‘Risk Management and Assessment’. The areas covered in the session ranged from Evolution of Risk
Management and Managing Uncertainty, to Risk Management Principles, then leading on to how an
organisation can develop a framework in which these principles can be applied.
Issues affecting organisations taking risks include reputation, misplaced trust and unintended
consequences. There was discussion on the idea of measurable vs. un-measurable risks, that is, a risk
that the organisation could take vs. an unseen threat to it. Risks are the potential issues that the
organisation has foreseen and prepared for; a threatis something that has come out of the blue.
The pace of change in the operating environments of organisations is rapid, particularly in the
development of risk management. One issue mentioned was that organisations need to look at
sustainable growth as it will allow them to control growth spikes. Spikes in growth could have a
negative impact on the level of service provided to existing members of the organisation.
Instigating a proper strategic aim will help negate many of the risks that organisations will
encounter. Creating one will help enable not just the discovery of what you are aiming to do, but
how it will happen. In order for this to work you need to listen to all stakeholders - management,
workers, etc. In addition, your workers and management need to know who has what duty in
relation to achieving the aim, and what time frames are applicable.
According to Peadar, one of the potential downfalls of organisations these days is potentially hyperconnectivity. It is also, however, a reality of life and work in the modern age. An example of where
this could be an issue is if an organisation is working on a combined project with another similar
organisation, and, for any reason, one side fails to deliver on the agreement. This stands to damage
both organisations that made the agreement.
During the presentation it was stated that about 90% of organisations that fail do so due to lack of
good management. The way to combat this is to maintain a proper management structure, and to
hire the right people for the job. For example, when recruiting a director to a foundation, consider
the skills sets that are needed by the foundation. Just because people are good in their own field, it
does not mean that they will be good in your field – match needs to skills.
The constant rate of change in modern society was repeatedly highlighted. In order to adapt to this,
organisations must come prepared, and be able to react quickly. The shock you prepare for may not
be the one that hits you, but at least you will be prepared.
There was a reflection on director’s duties. These include:
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Fiduciary duties - where the director must always act in the interest of the company, and
must do so in the best manner possible.
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Directors ‘Do’s and Don’ts’ - these are what cause many organisations to fail. If a director
acts badly can reflect on the organisation and affect relationships with others.
Discussions and reports - Quantity does not equal quality. While reports might measure how
many meetings were had and give an overview of what was said in the meeting, they do not
necessarily convey how productive the meeting was.
One of the recurring statements in the presentation was: know where you are going and everything
will fall into place. Each organisation needs to establish goal – what do we want to do?
There was some comment on external audits. They use an outside view to assess the current actions
and financial state of your organisation, yet they have been known to be wrong. For example, the
banks all use external audits and yet the global financial crisis still occurred. So caution is advised.
Peadar introduced the image of turkeys and soldiers - turkeys are led and do not question, while
soldiers lead, question and prepare. In order for your organisation to succeed it needs to follow the
example of the soldier.
Reputation, Good Name, Brand Image, Credibility - these are things that all need to be taken into
account when preparing for risks as they can all be damaged if something goes wrong. It is for this
reason that they are also the main things that crisis management seeks to protect and to help
recover when a crisis does happen.
Key Points in Summary
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Preparation and Planning - 10 to 15 year view is a must. Formulate a strategy, state
your goals and how you will reach them! Understand obstacles and objectives.
Weigh the odds - evaluate amount of risk you are prepared to take/can take.
Threat is the complete unknown - risk is known. Threats are issues caused by
developments outside of the organisation. While you might be able to prepare for them,
they are a lot more unpredictable.
Risk - What can stop us/ have we covered risks? You need to examine and attempt to
foresee any potential issues that may cause a disruption to the organisational plans.
Tolerance of some failure is required - Mistakes are going to be made, particularly when
taking on new challenges. Some failures need to be accepted and not seen as the end.
For grant making trusts and foundations the following simple steps are recommended:
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Download ISO 31000 (standard for risk management) and look to utilise
State your goal – where do you want to go – keep it simple and tight, 3 lines
State what can stop you getting there – these are the risks
Categorise as follows:
- What risks we will take
- What risks we will not take
- What risks we with take with controls
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