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Risk Management Committees: Perspective Is Key

By Melanie L. Herman

Recently I had an opportunity to meet with a client organization’s Risk Management Committee. While many similar committees consist principally of paid staff members, this committee was made up almost entirely of volunteers. I am always impressed to meet a group of people who have willingly signed on to assist a nonprofit with risk management issues. I congratulated the committee for its leadership and dedicated service to the nonprofit. Then I recommended that the committee consider reconstituting its membership. Some members needed to resign, I explained, and new recruits were needed.

Sometimes a committee or board needs a new perspective that may be easiest to obtain by bringing in new members. But in this case my concern did not arise simply from the members’ lengthy service. It stemmed from the makeup of the committee—no one on the committee brought the perspective of the nonprofit’s client base and staff: young people. This particular organization serves teens across the country, providing an exciting and rapidly growing menu of programs and services. Typical staff members and volunteers at the nonprofit are Generation Xers, and the oldest staff members are young 30-somethings. Yet the Risk Management Committee—responsible for both identifying critical risks and developing practical solutions to manage these exposures—was comprised of middle-aged lawyers and other professionals—talented individuals in the 35–50 age group. Members of the committee smiled when I explained my concern that the committee needed younger members to effectively understand the organization’s exposures.

This particular client’s approach to forming a Risk Management Committee is not uncommon. It is rather logical to cautiously invite participation on the committee and celebrate when a group of 10 busy professionals quickly volunteer to serve. And better yet when seven of the volunteers are practicing or retired lawyers, bringing their knowledge of legal exposures to the committee’s deliberations. But unless the staff and clients of the nonprofit are middle-aged professionals, the committee can never be assured that it truly understands and appreciates the perspective of the nonprofit’s clients and staff. And perspective is essential to effective risk management.

Viewpoint

I watched a program recently cautioning parents to get down on their hands and knees to appreciate their home from a child’s view. The child safety expert explained that parents need to see household hazards from a little person’s perspective or they’ll miss potential hazards. At a child’s height one can see electrical cords, interesting outlets, and cupboard and drawer handles that provide easy access to cleaning materials and other items that should be off limits to children.

The mission of a Risk Management Committee is analogous to the mission of parents intent on child-proofing their home. But the ideal committee must include members whose backgrounds or recent experience allow them to appreciate and understand the perspective, motivations and experience of key stakeholders. The committee should strive to:

• Appreciate risk from the perspective of all key stakeholders, including clients/service recipients, staff members, volunteers, funders and possibly others (the identity of “others” depends on the mission and programs of your nonprofit);
  
  
• Understand how policies, procedures and other safety-related requirements can and might be circumvented or disregarded if they are viewed by staff or clients as getting in the way of the nonprofit’s mission;
  
  
• Seek practical versus overly complex or expensive solutions to key exposures—such as explaining the rationale for an important policy before adding onerous enforcement provisions;
  
  
• Commit to evaluating the effectiveness of any new risk management strategies or policies. A “good idea” that just is not working can lead to greater exposure. Unworkable or impractical policies should be changed or abandoned.

Nonprofits that have established a Risk Management Committee have taken an important step in exploring and addressing critical risks. Yet to be effective this committee must bring and reflect the perspective and experience of key stakeholders—including staff and service recipients—or risk missing exposures that could derail the nonprofit’s mission in the short or long term.

ABOUT THE AUTHOR

Melanie Herman is executive director of the Nonprofit Risk Management Center (www.nonprofitrisk.org). She can be reached at Melanie@nonprofitrisk.org.

riskVue | The webzine for risk management professionals
November 2005