Risk management

There are five key types of risk that can affect your voluntary organisation:

• Governance risks affect how the board or management committee makes decisions. They include problems with organisational structure, conflicts of interest or lack of skills.
• Financial risks affect the money available. They include problems with financial information, insurance cover, reserves, cash flow and fraud.
• Operational risks relate to the daily running of the organisation. They include problems with staff, pricing policy, safeguarding and assets.
• External risks are outside your control and are more difficult to expect and manage. They include events like the covid-19 pandemic, or Brexit.
• Compliance risks happen when your organisation does not follow essential regulation. For example, Charity and Employment law.

A failure under any one of these headings could lead to reputational damage of the organisation.

A well run and effective voluntary organisation should have a Risk Policy that is clear and easy to use.  This will ensure:

• You have processes for understanding and mitigating risk
• You have suitable controls over procedures to meet your objects, and safeguard assets and reputation.
• You have financial stability and can meet strategic and daily operational aims as set out in your charitable purposes.
• Trustees understand the level of risk that is acceptable within the organisation. They can then distinguish between the organisation’s risk tolerance and risk appetite.

Risk policy template

For more on how to use this, see our page on using SCVO templates.