Creating impact, embracing risk
The reality for any for organisation trying to deliver social change in the current context is that risk inherent to your work. Many boards and senior teams state high ambition or even have boldness or innovation as a value. But when you look at their actions in the cold light of day, these same organisations are operating defensively and more likely to favour incrementalism over innovation.
One problem is that conversations about risk can feel procedural. A final item on the agenda, the conversation can be taken over by a discussion about the technicalities of the risk register, rather than a more fundamental conversation about risk.
By contrast, boards that embrace risk, are clear about the scale and nature of risks they are facing, distinguish between the risks they can manage and those outside their control and set clear risk appetite are more able to support organisations take the bold actions needed to create social change.
Below we set out some steps that will help you have the right conversation at the board about risk.
Step 1
Have an open conversation about risk without papers. What are the major, strategic risks you are facing now? Thinking forward, how will that be different in 2 years and 5 years’ time?
Step 2
Ask each trustee to state their overall appetite for risk on a 1-10 scale and find the time to explore what the results mean – is there divergence or is everyone clustered around the same level of risk appetite? Are there gaps between your preferences and the organisation’s actions?
Step 3
Now that you have an overall level of risk appetite, identify the exceptions – you will have a different appetite for risks in relation to safeguarding versus new product development. Plot these out on the same scale.
Step 4
Target discussion in areas of difficulty or where there are exceptions. Taking the time to talk through particularly tricky scenarios like existential challenges to your organisation’s operation or reputation will pay enormous dividends.
Step 5
Translate this richer, more nuanced conversation into a new risk statement and register and set a timeline for regular review at full as well as in the relevant committee.
We often help boards to think afresh about appetite and risk. Get in touch if you’d like to align your board’s thinking.