Managing risk

Every community group faces some risks. Some examples:

  • strategic – competition from other groups or a change in the needs of local people means your service could be redundant
  • financial – your funding applications might fail and you could run out of money
  • operational – your activities might not go to plan, your equipment could fail or a member of staff might leave or become ill
  • compliance – your group might not comply with some rules – for example a kitchen could fail a health and safety inspection.

Your group needs to identify these kinds of risks and deal with them. There are four main ways your can deal with risk:

  • Transferring the risk (e.g. through insurance)
  • Avoiding it (e.g. not taking up a grant or contract if the risks seem too high)
  • Taking action to manage the risk and reduce the impact
  • Accepting it (where it is unavoidable)

When planning any aspect of your group’s work, including fundraising, it is important to identify:

  • any potential risks
  • the likelihood of a risk occurring
  • the impact of the risk if it did occur

It is a good idea to record all the risks you have identified in a risk log. This should contain a description of the risk, the score, what action you are going to take, who is responsible and when will it be reviewed. 

The Charity Commission produces guidelines on risk management, in which it points out the requirement on registered charities to identify major risks and put systems in place to mitigate them.

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