The Importance Of Effective Risk Management For Nonprofit Organizations

Risk is universal in business, and that goes for nonprofit organizations as well. Although many of these organizations grow comfortable in their practices and relationships, there is always a certain degree of risk. In some instances, risk may even be elevated as a result of the nature of the organization, such as stringent resource limitations. The key is to take proper care in understanding where those risks lie and how they might be averted.

What are the types of risks nonprofits commonly face? One growing area of concern is overlooking cybersecurity as reliance on technology increases. Technological advances often make it easier to maintain donor relationships, manage financial details and a long list of other advantages. However, it also opens the door to data breaches and other cybercrimes. This is frequently overlooked, with one industry analysis listing only a mere 20% of nonprofits having a policy in place to address cyberattacks.

If a nonprofit carries out virtual tasks or simply accepts donations online, a robust cybersecurity set-up is necessary. Going about this could be done many ways. There are cybersecurity consultants to help identify security weaknesses or oversights within the organization’s IT system. Once identified, these vulnerabilities can be addressed to keep out potential cybercriminals, both external and internal.

As nonprofits tend to operate on a small scale, there are also outside IT management companies specifically tailored to work with nonprofits and other charitable foundations. These services work to enhance their partner’s technology solutions, optimize the infrastructure and allow the organization to focus more on the mission.

In addition to these cybersecurity measures, another technology-related risk management solution is to procure cyber liability insurance. Nonprofits may include this in their risk management plans to help pay for the expenses brought on in the event of a data breach, such as providing compromised donors with credit-monitoring services.

Another major type of risk relates to finances. Whether through fraud, theft or any other means, the financial resources of a nonprofit organization face all manner of risk when not properly protected. Achieving a suitable level of protection could be done by purchasing insurance, specifically nonprofit business insurance. There is also general liability insurance in case of lawsuit or visitor injury. Other worthwhile protection plans cover certain risks relating to donor events, such as special event insurance and liquor liability insurance.

There is a lot more to effective risk management than what’s been covered. If you want to learn more about nonprofit risk management, please see the accompanying resource from Connect Cause for further information.

Infographic Provided By Managed IT Services For Nonprofits Company, Connect Cause