Conscious Chief Executives E-zine - Issue #011

Risk Management Rocks!! - Risk Seen Through the Lens of Strategic Advantage

Steven Bowman
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Most nonprofit chief executives (corporate as well!), when asked to define risk, describe their view of risk as:

• Something negative that happens to the organization
• The potential for loss
• Fraud
• Negative publicity

When asked how their staff view risk, the descriptions get even more depressing:

• A pain in the neck
• Too complicated and difficult
• Something we have to do
• A compliance issue
• Not much use in our day to day work

Risk is not inherently good or bad; it is more about the things that happen outside our expectations that might have an impact on our ability to achieve the strategic initiatives of the organisation.

The two main formal definitions of risk to be aware of are from Standards Australia (Australia) and the Committee of Sponsoring Organisations of the Treadway Commission (COSO, USA). They are very similar in intent, and focus on the strategic potentiality of risk, rather than the negative loss point of view.

For example, the Australian/New Zealand Standard AS/NZS 4360/2004 defines risk as:

The chance of something happening that will have an impact on goals

and risk management as:

The culture, processes and structures that are directed towards the effective management of potential opportunities and adverse effects

What would it be like if risk was viewed as just another way of looking at potential opportunity and innovation?

What if risk management was viewed as creating a culture of innovation?

Points of View about Risk

Here are some questions to ask about points of view regarding risk

• How do our staff view risk?
• How do our leadership team view risk?
• How does the chief executive view risk?
• How does the Board view risk?
• What would it take for all organizational risk stakeholders to view risk as strategic advantage?

Risk as strategic opportunity is more a mindset than a process.

This mindset includes:

• An awareness of risk possibility from points of view of staff, Board and key stakeholders
• Risk is seen as possibility and advantage, not compliance and protection
• Every risk treatment (this is the terminology used in risk to describe the management of that risk) also includes a strategic opportunity
• Risk as innovation is embraced by the whole organization at all levels

What is the Point Behind Risk Management?

The point behind risk management is to

• identify all the potential risks,
• rank them according to potential to occur and possible impact if they do occur,
• determine the quality of existing controls on the risks,
• develop new controls and strategies for the risks (called "treatment" in risk jargon),
• monitor these and
• extract strategic advantage from the whole process.

A simple process which is often made very complicated and difficult by the points of view that people hold about what risk is. And most organizations do not extract strategic advantage from the risk management process.

Risk management is the conscious awareness of all the risks involved in the organization, the strategic advantage of these risks, and the ease with which these risks can be managed. Though risk is inherent within all business opportunities, many leaders prefer to be risk averse. This can lead to missing opportunities. The very nature of business endeavors and success demands leaders to have a willingness to receive everything without judgment.

How risk is defined and acted upon is all a matter of choice of the leaders. Nonprofit leaders can choose to view risk as bad, complex and to be avoided, or as a strategic advantage and potential source of innovation that can enable the organization to undertake activities that others might not even consider.

Identifying Risk-You Have to Start Somewhere!

Identifying risks involves you not having a fixed point of view of what constitutes risk, and involving others who have different points of view about the organization, and therefore different points of view about risk.

Who have points of view about your organisation that matter to you?

• Board
• Staff who have responsibility for key areas
• Sessional staff, contractors, others who conduct programs on our behalf
• People affected by our services: clients, volunteers, members
• Union or staff representative groups such as Safety committee
• Funding bodies such as Bank, government agency, grant giver
• Regulatory entities
• Politicians who may have an electoral or portfolio interest
• Suppliers
• Media

Also, identify the risks that are identified with your:

• Asset register
• P&L
• Strategic and Business Plan
• OH&S reports, and…
• Benchmark against other organisations (swap risk registers/plans)

The next issue of this e-zine will deal with how to identify the risks, how to develop a really cool risk management plan that actually works, and the Boards role in all of this.

New: Fundamentals of Strategic Planning

See our latest blended-learning program available for download online
"Fundamentals of Strategic Planning”

*-Ideal for CEOs, Board members or staff charged with developing a strategic plan for your nonprofit organization. This program will facilitate you to lead from Strategic Awareness and create a strategic plan that is truly strategic.

*-The material covered in this program will provide you with enough detail to start your strategic planning, and there is further reference material that provides more in-depth knowledge that is referred to throughout the program.

*-There are written descriptions of the key elements of strategic planning, short audio sound bites that explore some of the concepts more thoroughly, short video clips that cover even more detail, and a series of learning review exercises to stimulate further insight and strategic thinking. Work your way through this program at your own pace, use the Table of Contents to immediately navigate to the section you require, and fast forward or review any section as you desire.

Click here for "Fundamentals of Strategic Planning” blended learning program.

Suggestion

There are 51 short YouTube video clips we have created on nonprofit governance, strategy, risk and leadership found at http://www.youtube.com/user/ConsciousGovernance which make excellent thought starters for Board development sessions, and for Board induction.

Click here >> to view them. Please feel free to copy these video clips and utilise them as part of your Board/staff or member development program.- Steve Bowman 

What's New?

1 day Masterclass in Advanced Nonprofit Strategy, Governance and Risk 

1. Melbourne-Tuesday 15th Sept,2009
2. Sydney-Wednesday 9th Sept, 2009
3. Brisbane-Tuesday 22nd Sept, 2009.

This Masterclass will provide leading-edge strategies and tactics for nonprofit executives and Board members that will shake long-held beliefs about strategy and governance. The Masterclass, which has been highly praised by hundreds of nonprofit leaders (click here for participant feedback) has been specifically designed for nonprofit CEOs, senior executives, Chairs and Board members. Places are limited. The format of the day will be:

“Forget the Strategic Plan and Build Strategic Awareness into your Organization”:

First things first, get the Board and staff thinking strategically and being strategic so that they are not developing a useless plan.

“But everyone tells me I need a strategic plan. Tell me again how I make my strategic plan work??”:

Once the Board are thinking strategically, what are the tactics they and the CEO can use at the Board and staff level to develop and make any strategic plan work.

“Risk Management Rocks! Risk seen through the Lens of Strategic Opportunity”:

Risk is sooo misunderstood! What if risk was strategic advantage? Creating a simple yet powerful risk management plan for your nonprofit, with the Board’s involvement. Many examples!

“So Where are the Potential Board Members and How do I Make Sure I Get the Good Ones?”:

Now we need to find the right sort of Board members, and establish accountability mechanisms from the start.

The registration is $550 for an individual, or for two or more people from same organisation, $475 per person.

Click here for brochure, details and rego form >>>

All registrants receive a free copy of the nonprofit e-book “The Conscious Chief Executive”

 Some of you have already attended one of our Masterclasses recently, so please feel free to pass this on to your Board or other colleagues.

Strategic Plan Facilitation

Contact Steven Bowman for an invitation to work with us to create your strategic plan that is truly strategic with embedded project action plans: in 1 day, involving key stakeholders, with fully accountability to the Board, staff and stakeholders.




"Strategic Risk Management: Risk as Strategic Advantage for Nonprofit Leaders"

This Chief Executive Quick Guide has been formulated to provide leading edge perspectives and techniques on topics particularly relevant to chief executives of nonprofit organizations around the world. This Quick Guide has been tested in the real world of nonprofit Board rooms and senior leadership teams, and is designed to provide points of view on key areas of chief executive responsibilities in terms of risk management. Only US$45.00, this Quick Guide is available as a downloadable e-book immediately. Click here for more information and to order >>>>

"The Conscious Chief Executive-Leading Your Nonprofit Organization to Success from Awareness"

This book is based on the awareness that all nonprofit organizations have unlimited potential and possibility to become successful and thriving if they are led by conscious leaders. This book shows what it would take for chief executives to become conscious leaders and to embody and be the greatness of who they truly are. It provides chief executives of nonprofit organizations a practical conscious leadership "toolbox" of strategies. Only US$35.00, this is available as a downloadable e-book immediately. Click here for more information and to order >>>>

"Advanced Strategic Planning-Strategic Planning that works for nonprofit Boards and Leaders"

What would it take for your strategic plan to be truly strategic? Do you want to know how to embed the strategic plan into all facets of your organization and get amazing buy-in from Board, staff and stakeholders? Do you want a process that is quick, focused and provides step-by-step guidelines that result in a strategic plan that is accountable and measurable? Only US$45.00, this Quick Guide is available as a downloadable e-book immediately. Click here for more information and to order >>>>

Who else would find this useful? Forward this e-zine

We really hope that you've enjoyed reading this e-zine. If you think your colleagues might be interested in taking a look, please feel free to forward it to them or give them this link: 
http://www.conscious-governance.com/Nonprofit-Executive-Articles/e-Zine/join-the-conscious-chief-executives-free-e-zine.html
Haven't subscribed yet?
If you're reading this on the recommendation of a friend and would like to receive all the future editions, you can subscribe for free by clicking on the following link. 
Subscribe to FREE e-zine

Previous Issues Topics

Issue #002 -- How can the Chair and the CEO work together productively?

Issue #003 -- What are the Powers of Members vs Nonprofit Boards?

Issue #004 -- How can we improve attendances at Board meetings?

Issue #005 -- How do we remove unproductive Board members?

Issue #006 -- Creating Strategic Awareness from your Vision Statement

Issue #007 -- Are you a Board-Savvy CEO?

Issue #008 -- Creating Strategic Awareness with your Board

Issue #009 -- Why Strategic Plans don't work-what to do about it

Issue #010 -- I've got my Strategic Plan-Now What?

Click here for links to back issues

Next Issue Topic

Next issue will focus on nonprofit Board remuneration (should we, shouldn't we, and why), a very emotive topic that has arisen more frequently in the past few months.
(Mind you, I might change the topic if something even more topical comes in. Let me know what you would like to see!)
Please send us any of your feedback, or any questions that you might like to see in the e-zine. All communications are confidential.
Happy reading
Steven Bowman

Contact Us

Contact us if you would like more information on any of the following:

Board and Governance audit and review Our Strategic Governance review is a comprehensive independent review of Board processes, including Board strategic processes, Board structure, Board and stakeholder communication, Board compliance responsibilities and strategic operational issues that directly affect the governance of your organization.

Strategic Planning facilitation Our Strategic Planning process encapsulates the most robust, time-efficient planning techniques to provide a focused, vision driven strategic plan, with value added components that embed the strategic plan into the Governance and operational framework of the organization. Powerful success measures, a unique ethics filter, strategic reporting frameworks and strategic thinking processes are end results of our Strategic Planning process.

Strategic Plan annual review facilitation Is your strategic plan on track? Our strategic plan review facilitation provides a focused forum for reviewing your existing strategic plan, with four key questions explored?1. What has worked with our strategic plan 2. What has not worked with our strategic plan 3. What has changed in our environment 4. What do we need to add or take out of our strategic plan

Telephone (61)3 95099529
Mobile 0438 325 782
Email us steven @ conscious-governance.com
Conscious Governance website www.conscious-governance.com
Physical address: 17 Gordon Grove, Malvern Australia 3144