Charity risk management has traditionally been undertaken by identifying as many risks as possible and then applying an impact/likelihood scoring matrix. This may be undertaken at team, department and then board level. The resulting risk register will be extensive and so the board typically focuses on the top ten highest scoring risks. In practice, however, this leads to much debate and discussion on the scoring methodology and distracts attention away from how the risks are actually being managed.
To achieve better governance of the key strategic risks, many boards accept that there will be a set of headline risks (usually five, but up to six) which will always be key for their organisation. And it is likely that these are similar across many organisations. This does away with the need for subjective scoring methods and an arbitrary cut-off for risks that get board focus (it will always be the eleventh charity risk that comes back to bite you!). It also saves much time and debate at board meetings.
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Source: The Directory of Social Change