Risk is an important matter for voluntary management committee members to consider. A business plan should include an assessment of the risks associated with the project to see if there are any weaknesses and if there are any threats to its viability.
There are many ways of assessing the potential risks to a project such as completing:
Good risk analysis and management is particularly important if your organisation has staff and volunteers, or takes on premises .
Managing financial risk can be a difficult area for voluntary management committees. They are responsible for ensuring public money is used for public benefit, and for ensuring that the good name of their organisation is not tarnished by financial mismanagement or malpractice. Yet virtually any form of growth and development carries an element of risk, and failure to adapt to changing circumstances is a major risk in itself. With tight internal procedures and effective planning, unnecessary risks can be minimised, and risks necessary for growth and development can be managed with confidence and care.
The following explores some potential financial risks and looks at how they can be minimised.
Responsibility for minimising this risk lies with voluntary management committee members, who must understand their financial responsibilities and:
Planning can alleviate this risk, for example:
Such risks can often be managed with appropriate insurance cover. It is important to check the terms of cover carefully, review all insurance annually and ensure cover is adequate for the level of risk for your organisation. Some kinds of insurance are compulsory, in particular buildings insurance and employers’ liability insurance. It may also be wise to insure:
Changes in the law, change of government and social, environmental and economic change can all have a financial impact on your organisation. Such risks are best anticipated and managed through strategic planning.
This is minimised by ensuring an appropriate organisational structure. If the financial risk is high, incorporation should be considered to limit liability.