In profit making organizations, risk is the probability that an actual return on an investment will be lower than the expected return. On the other hand, in nonprofit organizations, risk is the events arising out of uncertainty that may have a significant impact on the objectives of the organization. A risk can have consequences beyond failure to deliver on results. Moreover, it may negatively impact on reputation, integrity, credibility and trust from donors and stakeholders. Nonprofit organizations should take all these possible impacts seriously as its viability depends upon donor’s trust.
Risk management process is the whole set of activities the organization needs to follow. The process includes the following:
- identification of risk,
- measurement of risk,
- management of risk,
- monitoring of risk, and
- reporting of risks to appropriate level.
According to research report entitled “2020 Global Study on Occupational Fraud and Abuse” published by Association of Certified fraud Examiners 41% of fraud in not for profit sector takes in the form of corruption.
Please watch following video for details: