Five Small Steps Your Nonprofit Can Take to Reduce Risk
A quiet warning — a safety lifebuoy hangs beside a ‘No diving’ sign, ready but hopefully never needed.
Mission-driven organizations face a wide range of risks that can threaten their success. Data breaches, financial missteps, and PR crises can undermine even the best-run nonprofits. This is especially true when risk management is outdated or pushed to the back burner.
Risk management isn’t just about preparing for worst-case scenarios. It’s a key part of strong nonprofit leadership and shows up in everyday decisions and operations. While you can’t eliminate every threat, you can put simple, proactive safeguards in place to protect your people, your funding, and your mission.
Sound overwhelming? Here’s the good news about risk management: It’s not all or nothing. You don’t have to tackle everything at once for your efforts to count. Here are the top 5 things you can do right now to make your organization safer, stronger, and more resilient:
Install multi-factor authentication (MFA) on every software tool that requires a login.
Keeping hackers away from your financial systems and sensitive data (like the personal information of your donors) will help you avoid costly and stressful situations. Updating your IT systems to require multi-factor authentication will pay for itself in losses and damage avoided.Stop sending paper checks.
Check fraud results in billions of dollars in losses each year, and the problem is only growing. To reduce your organization’s exposure, require employees to be paid via direct deposit and shift vendor payments to secure ACH bank transfers. Going digital improves security, prevents fraud, and also cuts down on paperwork, saving time and money you can redirect toward your mission.Ask your insurance broker to assess whether your coverage matches your current level of risk exposure.
Most organizations don't think at all about the kinds of insurance they have or the coverage limits of the policies until they actually have to file a claim. But if you've grown in size or expanded your scope of work in the last few years, chances are you are underinsured. Make your broker do the work of assessing whether you need to shore up your coverage and let them know of any steps you have taken recently to manage risk (which can sometimes result in premium discounts!)Role play a worst-case scenario.
The worst time to decide what to do and how to do it is in the middle of a crisis. You can’t think straight, everyone is freaking out, and you don’t have time to do research or discuss options.Pick one emergency scenario and use a senior team meeting to talk through how you would handle it if it happened. This could be a natural disaster, a PR scandal, or a massive embezzlement. Just the act of talking through how you would handle any crisis, who would be in charge, what each department would do, what tools you would use, who would handle communications to stakeholders, etc., is extremely valuable practice for the real thing. All of it will help you when drama comes calling.
Reward your staff for raising concerns.
If you only have time to do one thing to improve the management of your risks, this is it. Your staff are the eyes and ears of your organization. They see and sense things all the time that could be a risk waiting to blossom into a full-blown hot mess. Don’t create an environment where speaking up about potential dangers is discouraged. Instead, create a culture of trust where staff feel safe pointing out concerns and asking for help to solve them.
For organizations of all sizes, the idea of adding one more responsibility can feel overwhelming. Every area of your work demands attention, and it can be tempting to deprioritize “what if” scenarios. But risk management is a critical investment in your organization’s stability and future. Taking even one small step today can strengthen your operations, build trust, and help ensure you’re ready for whatever comes next.
Learn more about how your nonprofit can manage and leverage risk.
