social enterprise learning toolkit (risk management module)
DESCRIPTION
TRANSCRIPT
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Risk Management for Social Enterprise
An enp Strengthening Your Skills workshop
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Workshop Objectives
At the end of this workshop, you will be able to:
1 Understand what constitutes a risk and/or an opportunity.
2 Apply the process of managing risk.
3 Use the tools and techniques to support risk management in your social enterprise.
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Risk Management is an integral part of managing a sustainable social enterprise
Source: www.enterprisingnonprofits.ca/learning-toolkits
Social Enterprise Learning Toolkit
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Where are you along the Social Enterprise Development Path ?
Social Enterprise Development Path
Opportunity IdentificationOpportunity Identification
Business Plan
Business Plan Start-UpStart-Up StrengtheningStrengthening
Organizational Readiness
Organizational Readiness
Feasibility Study
Feasibility Study EvaluationEvaluation
Source: The Canadian Social Enterprise Guide (2nd edition)
Launch Preparation
Launch Preparation
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What is a risk?
A risk is anything that might happen and that, if it did happen, would have an impact (+/-) on the ability of a social enterprise to accomplish its mission.
A risk is anything that might happen and that, if it did happen, would have an impact (+/-) on the ability of a social enterprise to accomplish its mission.
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What is Risk Management?
Risk Management is a process that enables a social enterprise to cope with uncertainty by taking proactive steps to protect its assets & resources.
Risk Management is a process that enables a social enterprise to cope with uncertainty by taking proactive steps to protect its assets & resources.
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Why manage risk?
The benefits of Risk Management• identifies risks and opportunities not already
considered• effectively constrains risks to acceptable levels• informs decisions about exploiting
opportunities• increases stakeholder confidence in achieving
desired outcomes
The benefits of Risk Management• identifies risks and opportunities not already
considered• effectively constrains risks to acceptable levels• informs decisions about exploiting
opportunities• increases stakeholder confidence in achieving
desired outcomes
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How do you manage risk?
Identify Risk
Identify Risk
Assess Risk
Assess Risk
Manage Risk
Manage Risk
Review & Report RiskReview &
Report Risk
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Identify Risk
Identify Risk
Assess Risk
Assess Risk
Manage Risk
Manage Risk
Review & Report RiskReview &
Report Risk
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5 Types of Risk
• People• Property• Liability• Income• Compliance
• People• Property• Liability• Income• Compliance
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People
• Workplace injuries• Death, disability, retirement• Resignation• Disengagement
• Workplace injuries• Death, disability, retirement• Resignation• Disengagement
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Property
• Partial or total loss of premises• Theft of equipment, inventory, cash,
information • Intellectual property compromised• Brand & reputation damaged
• Partial or total loss of premises• Theft of equipment, inventory, cash,
information • Intellectual property compromised• Brand & reputation damaged
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Liability
• Injury to clients, general public• Product liability• Damage to property of others• Breach of contract • Professional liability
• Injury to clients, general public• Product liability• Damage to property of others• Breach of contract • Professional liability
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Income
• Loss of grant funding• Revenue shortfalls• Fire, floods, natural disasters • Change in market conditions
• Loss of grant funding• Revenue shortfalls• Fire, floods, natural disasters • Change in market conditions
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Compliance
• Laws & regulations - knowing what applies to your social enterprise
• Legal responsibilities of employers• Workplace health & safety• Human Rights • Privacy
• Laws & regulations - knowing what applies to your social enterprise
• Legal responsibilities of employers• Workplace health & safety• Human Rights • Privacy
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5 Types of Risk SummaryPeople Property Liability Income ComplianceWorkplace injuries
Partial or total loss of premises
Injury to clients, general public
Loss of grant funding
Laws & regulations - knowing what applies to your social enterprise
Death, disability, retirement
Theft of equipment, inventory, cash, information
Product liability Revenue shortfalls
Legal responsibilities of employers
Resignation Intellectual property compromised
Damage to property of others
Fire, floods, natural disasters
Workplace health & safety
Disengagement Brand & reputation damaged
Breach of contract
Change in market conditions
Human Rights
Professional liability
Privacy
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Identifying Risk
Sample case studies:
• Do Good Landscaping
• Cool Threads Thrift Store
Activity Activity 11
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5 Types of Risk
• People• Property• Liability• Income• Compliance
• People• Property• Liability• Income• Compliance
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Identifying Risk
• Types of exposures• Get input from many stakeholders – board,
managers, staff, clients, partners and suppliers• Use external facilitation/resources if possible• Own the process
• Types of exposures• Get input from many stakeholders – board,
managers, staff, clients, partners and suppliers• Use external facilitation/resources if possible• Own the process
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Surveys,Questionnaires
Surveys,Questionnaires
Identifying Risk - Sources
Financial StatementsFinancial
StatementsRecords &
FilesRecords &
Files
ContractsContracts FlowchartsFlowcharts Facility Inspections
Facility Inspections
• .
• .
• .
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Identify Risk
Identify Risk
Assess Risk
Assess Risk
Manage Risk
Manage Risk
Review & Report RiskReview &
Report Risk
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Probability
Impact
1Extremely unlikely
2Likely
3 Extremely
likely
1 Not critical 1 2 3
2 Significant 2 4 6
3 Fundamental to continuing operations
3 6 9
PriorityLowMediumHigh
Impact x Probability = Risk score
Assessing Risk
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Assessing Risk
Consider the risks that face your own social enterprise, or one with which you are familiar:
•Identify 3 risks that the organization faces
•Use the simple matrix on the next slide to give them scores and determine the levels of risk
Activity Activity 22
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Impact x Probability = Risk score
Risk Assessment Matrix
Activity Activity 22 Probability
Impact
1Extremely unlikely
2Likely
3 Extremely
likely
1 Not critical 1 2 3
2 Significant 2 4 6
3 Fundamental to continuing operations
3 6 9
PriorityLowMediumHigh
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Identify Risk
Identify Risk
Assess Risk
Assess Risk
Manage Risk
Manage Risk
Review & Report RiskReview &
Report Risk
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Accept
The risk may be acceptable without any further action being taken. The ability to do anything about some risks may be limited, or the cost of taking any action may be disproportionate to the potential benefit gained.
TreatMost risks will be addressed in this way. Actions are taken to mitigate the impact and/or probability of the risk to an acceptable level.
TransferFor some risks the best response may be to transfer them for example, by taking out insurance. Some risks are not (fully) transferable – e.g. reputational risk.
Avoid Some risks will only be treatable eliminating the source of the risk.
Take the Opportunity
This is not an alternative to those above but an option which should be considered whenever accepting, transferring or treating a risk. Do circumstances arise which offer positive outcomes?
Managing Risk – 5 Strategies
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Identify Risk
Identify Risk
Assess Risk
Assess Risk
Manage Risk
Manage Risk
Review & Report RiskReview &
Report Risk
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Reviewing and Reporting Risk
• Why review and report?• Frequency of review• Who “owns” the risk
• Why review and report?• Frequency of review• Who “owns” the risk
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Description of Risk
Probability (Low/Med/High)
Impact (Low/Med/High)
Rating (score)
Risk Owner
Strategy to deal with Risk – (accept, treat, transfer, avoid, take the opportunity)
Cost $
Cost Time
Frequency of Review
Re-assessor
Risk Register
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Create a Risk Register
For each of the 3 risks that you identified in Activity 2:
•Complete the table on the previous slide (you can download the worksheet).
For your own organization you will need to do this for each of the risks, producing a risk register.
Activity Activity 33
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How/when to adjust your Risk Management plan
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• User Guide & Glossary • Risk Types Chart• Risk Management techniques chart• Risk Assessment matrix• Risk Register
Tools and templates you can download
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Take action – your next steps!
• Use the risk management process to produce a risk register for your social enterprise.
• Download and use the tools and templates provided.
• Review and update your risk register regularly as part your ongoing management practices!