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What is Risk?

1: possibility of loss or injury :peril2: someone or something that creates or suggests a3a: the chance of loss or the perils to the subject matter

of an insurance contract; also:the degree of probabilityof such loss; b: a person or thing that is a specified

hazard to an ; c: an insurance hazard from a specifiedcause or source

4: the chance that an (as a stock or commodity) will losevalue

OPPORTUNITY is risks positive aspect

Copyright 2001 Susan Kenny Stevens. Excerpted from the book

Nonprofit Lifecycles: Stage-based Wisdom for Nonprofit Capacity. All rights reserved.
http://www.merriam-webster.com/dictionary/perilhttp://www.merriam-webster.com/dictionary/peril


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Your Organizations RecentExperience

What risk / opportunity has your organizationfaced recently?

What was the process for considering it?

Who was involved? Was a decision reached? How?

Has action been taken?

Did you achieve the intended outcome?

What went right; what went wrong?


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Legal Duties of the Board

Duty of Care

Duty of Loyalty

Duty of Obedience

These are standards of conduct the law requiresboard members to uphold.


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Board Profile; Appetite forRisk

Monitor and protect

Dare to dream and decide


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From Opportunity to Action OPPORTUNITY / CHALLENGE

Knowledge, Information

Generate it Process it Weigh

alternatives

MAKE DECISION

IMPLEMENT DECISION PASS/DEFER


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Elements of Good Decision-making


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I. Build a Decision-makingTeam and Culture1. Diverse membership backgrounds, expertise, ability to

represent important constituencies

2. Culture of mutual trust and respect; listening and opendialogue are valued

3. Regular discussion about external as well as internal

environment4. Habit of considering long-term as well as short-term

challenges and successes

5. A network that provides additional information,

perspectivesWhat are your teams strengths and challenges?How did they advance / hinder your organizations recent

experience with risk evaluation?


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Fear Is Natural; DevelopAntidotes Open communication

Information that contextualizes, quantifies therisk

Talk about past failure & what has been learned

Focus on the ultimate goal for which thisdecision is an intermediate step

Others? All learning involves some failure.

The only true failure is the failure to take action and trysomething new.


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The Role of Board Structure,Systems

Processes for engaging and delegating theboard in research and decision-making

Clear boundaries around

Board / staff work

Committees scope of work Board member term limits


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II. Gather Information

1.Survey the environment; build situationalawareness

2.Get help as needed inner circle informed, unbiased supporters

outer circle - weak ties; advice from detached pointof view

oracles exceptionally clear-minded about whatthe future may hold

3.Look to the future instead of rethinking the past;use information to avoid being trapped byhistory


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II. Gather Information (cont.)

5.

5.Combine dispassionate assessment withpassionate commitment

6.Focus on doingsomething smart over sounding

or looking smart. If you develop an elegantplan or set of strategies, make sure you knowhow you will implement.

7.Assess which constituencies are on board and

which are not


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III. Break into ManageableSteps1.Outline the questions to be answered; work

methodically to answer them

By what date must we make a decision?

Is the decision affordable?

Is the decision reversible?

Can we test the decision?

How will the organization be affected by a yes? and by a no?

For how long?

2.Set intermediate goals and tangible targets thatadd up to larger, ultimate aims


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IV. Establish Shared Values,Priorities (cont)4.

5.Stay away from opportunities where decisionsare improperly constrained

6.Set self-interest aside


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V. Establish Who Decides

1.

2.Clarify authority among all leaders

Identify / review the implications of responsibilityand authority

3.Appreciate the decision-making capabilities ofothers; devolve decisions where appropriate

Build decision-making capacity in others

4.Pull back decisions if necessary

5.Keep everyone informed about objectives of themoment and the organizations situation


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VI. Be Proactive, Responsive,Action-oriented

1.Take swift action when necessary2.Trust intuition only if it is well-informed

3.Measure & track what matters what can helpturn knowledge into action

IMPLEMENT DECISION PASS/DEFER

4.Keep surveying to determine whether current

strategy will continue to win in months/yearsahead; change course if necessary

5.


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Resources

The Go Point, Michael UseemThe Knowing-Doing Gap, Jeffrey Pfeffer & Robert I.

SuttonManaging the Nonprofit Organization, Peter Drucker


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Contact Information

Nancy Lee, Managing Consultant LarsonAllen Nonprofit and Government Group

220 South Sixth Street, Suite 300 Minneapolis, MN 55402

651.261.5670 [email protected] and [email protected]

www.larsonallen.com/publicservice
mailto:[email protected]:[email protected]

boards as partner in risk-taking-la

Documents