Alison Pritchard, Sustainable Funding Manager at WCVA, considers the impact that being overly risk averse can have on an organisation’s resilience.
The word ‘risk’ often has negative connotations, but without risk we don’t develop or innovate – keeping the voluntary sector moving forwards, meeting the needs of service users, attracting donors and matching their evolving giving behaviour with appropriate fundraising and income generating activities.
The following statements are taken from a true/false quiz that formed part of a recent course I did from the Institute of Leadership Management. They’re a good opportunity to explore our attitudes and thinking around risk and failure.
The chances of a strategy failing should be considered when evaluating risks and potential benefits
TRUE – strategies should be reviewed objectively. If the work you have done to inform your strategy (e.g. research of similar activities, consultations with stakeholders, pilot projects) tells you it is unlikely to be successful, then it would be imprudent to continue. However, if the potential benefits outweigh the chances of failure, then it’s worth delivering on the strategy.
In order to effectively promote risk taking and make it an integral part of plans and policies, you must allow people to fail without fear of consequences.
TRUE – within reason. There’s failing and then there’s failing. The failure of a new fundraising activity to succeed when appropriate planning and consideration has taken place (because, for example, there is a global pandemic) is not the same as something failing because of negligence, or misconduct. Context is also important. If you invest £10,000 in a fundraising event that ultimately performs at a loss, but your turnover is £1m (and your evaluation can show you why it didn’t work), this is not as impactful as investing £100,000 without doing your research and not understanding how you’ve wasted 10% of your income.
The best way to learn about risk is to experience it – that is far more effective that acting out scenarios or attending a training course on risk.
TRUE – training courses and role plays will help us learn the theory and knowledge behind risk (e.g. how to develop a risk register, which is a key skill to develop), but many of us will best learn by doing. By that, I am not encouraging you to jump headfirst into a new activity or fundraising method without learning about and applying risk management theory first. We have a duty to our donors, funders, and beneficiaries to spend the money we raise/earn responsibly, and that means taking an informed approach to our learning by doing.
Uncertainty and unexpected circumstances already dominate our world, so your focus should be on building stability not taking risks.
BOTH – As the world evolves around us (2020 feels like a year chock-full of evolution for societies across the globe), in some instances, stability could mean stagnation. Charities that have not been able to evolve (for instance developing ways for donors to support digitally, addressing their equality and diversity, or making the most of new communication platforms) will risk becoming irrelevant to increasing numbers of supporters and potential supporters.
Your understanding of the risks involved may be improved if you take the time to speak with a trusted team member.
TRUE – Using the experience and judgement of the people around you to assess the risk of activities you are planning will more than likely result in well-rounded and informed assessments, and more effective plans to mitigate those risks. Therefore it’s important to have diverse people in your organisation.
It’s only by mathematically calculating the probability of every conceivable event happening that you can only make an accurate diagnosis about the likelihood of risk.
FALSE – I’m pretty sure that when the Newport Marathon was being planned last year, a global pandemic did not feature on the risk register. In creating a solid risk register, we should try and create a complete list of the most likely risks, but it’s impossible to come up with every possible eventuality and we would not be protecting our people from stress if we tried to do so.
In a bid to ensure competitiveness you should strive for new and innovative solutions – taking risks will help to secure the organisation’s longevity.
BOTH – I don’t believe in doing new or innovative things for the sake of it. If your service is no longer meeting the needs of your beneficiaries, or your staple fundraising event has gone a bit stale, then it’s definitely time to take a (well-researched and informed) risk to establish something new and innovative (it might just be new or innovative to you, your beneficiaries or your locality, not to the world). However, I think the old adage ‘if it ain’t broke, don’t fix it’ has its place here too. By all means make something more efficient if you can, but not at the expense of those outcomes.
Don’t consider a Plan B; when you’ve made your decision, commit to it 100% to instil confidence.
FALSE – this would be an irresponsible course of action, especially when you are using public funds. If your monitoring has shown that Plan A isn’t working, its time to consider either adapting Plan A or embarking on Plan B. You have a responsibility to your beneficiaries, funder(s), donors, staff, volunteers and the Charity Commission to spend money responsibly. This means informed spending and adapting plans when needed.
If you know an idea has worked in a different setting then it will work in yours too, no risk involved here just put it into practice.
FALSE – it may very well be that the idea will work in your circumstances, but it comes with risk like everything else. Research, pilot projects, feasibility studies and consultations could all help you work out the potential success of an idea.
A leader’s greatest fear is the fear of failure, so you must drive for and accept nothing less than success every time
FALSE – I’m sure many of our most successful leaders view failure as a necessary part in any organisation’s long-term development. Failure gives us opportunities to learn; to get to know ourselves, our organisations, and our beneficiaries better.
The possibility of success is usually less of a motivator than the avoidance of failure, according to research – so a ‘can-do’ culture usually necessitates a change in mindset
TRUE/FALSE? – This is an interesting one, which I think depends on the general culture of the organisation. At WCVA we are very motivated by the success of the voluntary sector in Wales. We’re a passionate bunch who work hard to help charities make a bigger difference together through individual successes.
When you have mitigated the level of risk there is no need to continue to monitor the status of that risk
FALSE – Risk management is an ongoing activity. Your risk register should be a live document that is updated at regular intervals and/or when a new risk is identified.
Check out our ‘Principles of Governance’ information sheet on the Knowledge Hub for more information about the responsibilities of charity leaders. Look out for further resources on risk management coming later in 2021.