NFPs Have Poor Risk Management - Survey

Almost half the Not for Profits surveyed recently in Australia and New Zealand do not have, or do not know if they have, a risk management plan.

The revelation comes from advisory firm PPB which has released the results of its survey into the risk management practices of 291 Not for Profit organisations in Australia and New Zealand.

The survey findings demonstrate that some organisations are not effectively managing risk despite the high duty of care owed to their stakeholders.

While many organisations in the sector have robust and dedicated risk management plans, the survey found that there is a significant proportion that are potentially exposed due to poor or non-existent risk management strategies and procedures.

Equally, the survey found that members of organisations which effectively managed risk believed that they were more profitable and transparent.

Some key findings of the survey reveal that:

• 49% of respondents do not have, or do not know if they have an up to date risk management plan;
• Almost one quarter of respondents still believe that risk management is of only moderate importance;
• 61% of respondents state that risk to their organisation has increased over the past five years;
• Over one third of Not-For-Profit boards are not held accountable for managing risk in their respective organisations;
• Almost 50% of respondents believe that budgetary constraints are the main barrier to adequate risk management support.

PPB Partner, Lisa Bundesen, says that there is certainly room for improvement for many Not for Profit organisations, as there is still a lack of sophistication in their approach to risk, and their understanding of risk management.

Bundesen says given the size of the sector, and the fact that a large percentage of income comes from the public (eg. government grants and donations), these organisations owe it to their stakeholders to take adequate measures to protect against issues such as fraud, public liability, financial risk, environmental concerns and other risk factors.

She says whilst some of these statistics are very concerning, it is important to point out that there is a very large number of Not for Profits that do manage risk well, and do have the appropriate plans and procedures in place and the survey indicates that these organisations tend to be more successful overall.

She says one of the key issues for many organisations is a lack of guidance and understanding of risk at Board level with many Board members in this sector being volunteers, and their focus is on promoting the cause of the organisation they represent.

Whilst commendable, she says the research clearly demonstrates that more resources need to be dedicated to the understanding and implementation of better risk management practices.

Further information or a copy of the report, please contact: Lisa Bundesen, Partner, PPB: (+61 7) 3222 6800