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By Nick Koerbin
No matter the size of your association, risk management is one of the significant challenges facing volunteer boards. Often, Boards are
expected to meet and decide there and then to enter into contracts with suppliers, sometimes worth thousands of dollars, without a proper
risk assessment.
The latest research by Association Executive Services of over
100 Associations in Australia has revealed that very few associations have a structure for conducting a risk assessment on proposed
partnerships or contracts with suppliers.
Most association board members are volunteers and time-poor and are often vulnerable to poor decision-making when entering agreements with
third parties.
To reduce risk to your association, set up a risk management committee.
Here is how to go about it!
💡 Get sign-off from the Board and develop terms of reference for the risk committee. What risks will the committee assess, and how
will they report to the Board?
💡 Identify who should be on the risk committee; it is typically the treasurer and about three other volunteer members who may have
financial, legal, supplier management or similar skills.
💡 Define responsibilities, reporting structure, and duties. When do they meet? Who do they report to?
💡 Develop a risk management framework and risk assessment structure. For example, the risk management committee may need to review
contracts over a certain amount in value.
💡 Identify the assessment process and timelines for reporting to the Board.
💡 Finally, could you ensure there is a Board policy supporting the roles and functions of the risk committee, which forms part of the
compliance under board governance?
Most boards don't have a minutes problem until they need them. Then they find twelve pages of who said what, or three lines that record nothing at all.
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Risk management is one of those areas that every association and not-for-profit Board knows is important - but it can sometimes become
little more than a risk register reviewed once or twice a year.
Insurance can be treated in much the same way.
The organisation receives its annual insurance renewal, the premium is approved, the policy is renewed and everyone assumes the organisation
is covered.
How we help membership based, not-for-profit associations now and into the future.
