It is good practice to carry out regular comprehensive assessments of all the risks faced by your organisation and to maintain a register of them. Many of these risks will be operational: delays or shortfalls in trading income, accidents, staff absences, mishandling of money, client abuse etc. Some risks will be strategic, in that they carry a threat to the long-term effectiveness or viability of the organisation.
In a funding crisis, it is vital to assess the strategic risks in terms of:
• Description of the risk
• Probability that the situation will arise
• Impact or consequence of the situation if it does arise
• Significance of the risk (probability multiplied by impact)
• Mitigation – action in advance to reduce the probability and/or the impact
• Contingency – your planned response if and when the situation arises
A common approach to prioritising risks is to score them relative to each other. Scoring probability and impact each on a 10-point scale would give you a 100-point scale for significance, for example. Using a simple chart, you could adopt a traffic lights indicator system whereby any risk receiving 50+ points for significance receives a red light, with say 20+ points receiving a yellow light.