Managing Your Nonprofit for Resilience

4Prioritize Your Risks

NONPROFIT RISK MANAGEMENT requires being honest about what is going on, then taking the next reasonable step in response to that reality. In Chapter 3, we explained how to perform a risk inventory. Now we turn to taking the next reasonable step, which is always a matter of prioritization.

A solid risk inventory exercise will ordinarily identify somewhere between 50 and 100 threats and opportunities across all nonprofit functions. This chapter will explain how to move forward with that list: who should be involved in prioritizing risks, how to prioritize them, and what to do with the results. (See Figure 4.1.)

Figure 4.1 The Risk Dialectic

Prioritization Is a Dialectic

In a for‐profit sole proprietorship or closely held corporation, the question of who determines priorities is relatively simple. The organization exists to make money for its owners, so its owners determine the organization's priorities. In most small businesses, the owners are closely associated with day‐to‐day decisions. The owners may delegate prioritization to one of their members. They may hire someone (a manager or CEO) to make such decisions. Whatever the precise details, however, operational and strategic priorities are determined by and on behalf of the owners.

In a nonprofit organization, however, the question is more complex. Technically, as a matter of nonprofit law, “the ...