The Philantrepreneur Journal - Page 8

8 TPF JOURNAL RISK AWARENESS & PREPAREDNESS: WHAT ARE YOUR POTENTIAL RISKS?     RALPH MCNAMARA                                    To start a nonprofit you must choose a name, obtain your license, your tax status, choose initial directors, find a location, prepare a business plan, line up donors, select volunteers, open a bank account, etc. Once all of that is completed you are ready to hang out your shingle and focus on making the nonprofit successful and beneficial to your mission/ cause. Then there is the matter of promoting your nonprofit, getting a digital presence, media coverage, and community support and recognition. Many nonprofits do not take the time to consider possible risks whether their nonprofit is home based or it is in a brick-and-mortar location. There are many risks that can arise unexpectedly that may cause harm to your nonprofit, to your financial situation, and to your professional and personal reputation. When developing and starting your nonprofit what do you think about when it comes to potential risks to your nonprofit? Do you think of a risk of a fire, a risk of theft, a risk from fraud, a risk of liability or legal issues, a risk of a loss of donors, or a risk of a loss of your professional reputation? What do you think will be the greatest potential risk to your nonprofit? Or, do you think about risks at all or that risks will never happen to your nonprofit because they only happen to other people in other places? Starting a nonprofit is challenging enough without having your dreams ruined because of an unexpected risk event. New, as well as established, nonprofits are so focused on providing for its mission or cause, growing their nonprofit, and maintaining financially stability, that one of the last things they think about is risk management or planning for unexpected potential risks. Since there is very little in the way of making new (or established) nonprofit owners aware of how to identify, THE PHILANTREPRENEUR JOURNAL understand, and prepare for potential risks, the only way they become aware is after the adverse unexpected risk occurs. More needs to be done to make the nonprofit community aware of operational risks such as how to identify, understand, address, and plan for potential risks. Not being aware of or prepared for potential unexpected risks could destroy the nonprofit’s financial stability, the nonprofit, and the reputation of the nonprofit, as well as its owner. Operational risk management is different than traditional risk management in that traditional risk management usually only addresses compliance, financial, or insurance risks. Operational risk management addresses a much broader range of risk areas, with the most common areas being Legal/Liability I Օ̰MMɥ)Qѕ啕̽Yչѕ̰ɅՐQа)%Ʌɔ%ѕɹ ɽ̽À)Aɽɕ̸Qɕɔɽ́ɔɅѥɥͬЁ͕͵ЁѡЁٕ)ЁЁѡɕ́ѕٔ́ݕ)ѡȁɕ̸ɕͥٔѥɅѥɥͬ)͕͵Ёݥɽ٥ٕ٥܁ѡЁЁ)́Ёѡѕѥɥͬɕ̰Ё́ѡɽЁ͡չхȁɕͥѡ͔ɥͭ́ݡѡ䁽ȸɕ)ɥͬЁ͕͵Ёݥͼɽ٥)ՉЁѕȁ́ȁѡɽЁѼх()(T1dȀĀ((0