Risk is Good

Sometimes we insurance agents focus on potential dangers, hazards, risks, and exposures to loss way too much. It’s our job and you hire us to do just that, but we can lose focus on greater issues by focusing simply on possible losses.

I was in an insurance company’s agent advisory council meeting some time ago and a risk management expert was giving a talk about some resources she had available for nonprofits.

Something she said struck me:

Managing risk isn’t only about mitigating or avoiding risks. It’s also about choosing to take risks. (Paraphrased)

While it’s important to have insurance and wise risk management controls, you can’t let caution dictate your nonprofit’s dreams to effect change.

Some in my industry might think differently, but you cannot, ultimately, let an underwriter tell you what programs you can or cannot do to accomplish the vision that you and your stakeholders believe in.

Vision First. Risk Management Second (or Third)

I’m a salesguy. I peddle insurance and advise my clients on coverage and best practices around risk management (which helps them  qualify for the best possible coverages and rates).

But while I’m paranoid by nature, I hope that my clients don’t limit their vision casting and possibility exploration because of insurance worries.

Since I am a salesperson with a bent toward marketing, coaching and leadership, I not only want to provide value to my clients, but I also love to have an overall vision and dream big. I’m geeky about sitting with a group of people and dreaming about the possibilities of the team or organization:

  • What can we do for the nonprofit community?
  • How can we generate revenue?
  • How can we support our service and products with free content that will bolster the 501c3 community at large?
  • If we had no restraints, budgetary or otherwise, how would we go about our business?

We ask those questions and allow the different perspectives and personalities in the room offer ideas, sharpen each other, and clarify the possibilities.

We cast vision first. We select the best course of action. Then we figure out the ‘how’.  We have to respond to the ‘why’ first. Then we can settle into the operational nuts and bolts, including risk management concerns.

I hope my nonprofit clients do the same thing. As much as I want boards of directors to encourage wise risk management, I prefer them to respond to their vision and creativity first.

  • What risks should you take?
  • What one thing should you as a board member or executive leader push forward?
  • Even if it’s a little scary to think about it–what should you do?

Take that risk. But do it wisely. Hopefully, the board is smart enough not to create a rock climbing program in the Himalayas for 2 year olds or decide to have twelve year olds remodel houses for the elderly. Paint a wall maybe, but no framing and plumbing.

Risk Management – Important, but Secondary – at least strategic planning chronology

After you spitball and brainstorm and whiteboard and mindmap, what next?

Execution is up to you, but when you start making decisions on what programs to implement, it makes sense to consider the ramifications. It’s at this point  that you want to start backing into the ‘How’. The ‘How’ considers risk management.

Greater risks will incur greater costs. Greater risks will require more stringent safety controls. But if the risk is worth it, you’ll figure out a way to cover those, right? You’ll make sure that your people are trained. You’ll make sure your clients and employees have a healthy environment to engage.

For instance, if you’re an addiction counseling office and your leadership decides that a residential facility is the next best stretch goal for your nonprofit, you don’t want the increase in insurance costs and the more intense risk management considerations to stop you.

But you can’t neglect the considerations either:

  • Consult with other organizations that are doing the same thing well.
  • What makes for a safe and healthy environment?
  • What insurance needs to be added or beefed up?
  • What new or more stringent background check standards need to be implemented?

Do your thing. Take the risk. But do it wisely.

Risk is Good

If nonprofits weren’t taking risks to make change in our communities, country, and world, then there would be quite a bit more suffering than there is even now.

When you dream, dream big. Let the boardroom not only be a place of best practices and ‘checking in’, but a place of excitement and possibilities.

I hope you don’t mind an insurance man giving his two cents on these things. I just know that any organization, if it simply sits in maintenance mode, isn’t a fun and exciting organization. As the Psalmist says, ‘Where there’s no vision, the people perish.”

So take a risk. Jump out of a metaphorical plane, but make sure to have a guide and a parachute if it’s your first time.

Risk is good. It’s exhilarating. It changes things.

Questions

  1. How does your Board and leadership team create an atmosphere for forward thinking strategic planning?
  2. When do you start considering risk when coming up with a BHAG (big hairy, audacious goal)?
  3. Have you ever taken a chance you shouldn’t have?
  4. Have you ever NOT taken a chance that you regret?

*Thank you to Robert Hodge of Robert D. Hodge of Associates, LTD for a comment on my post  in the BoardSource LinkedIn group. It sparked this post – although he was not consulted on this piece and I will not hold him to agreeing with it, in part or in whole.

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