Is your charity ready to adapt to a changing risk environment?

Our recent charity trustee insights survey shed light on some concerning gaps and key trends in risk management within the charity sector.

Gaps in regular reviews

Effective risk management is essential for running a charity. It ensures that potential threats are identified, assessed and mitigated to protect the organisation's assets, reputation and beneficiaries. It also allows decision-making to respond effectively to the risk environment, including new and emerging risks. The Charity Commission's guidance on risk management underscores the importance of regularly reviewing and updating risk registers to account for new risks and changes in the operating environment. However, our survey found that while 79% of respondents’ charities regularly review and update their risk registers, a concerning 21% either do not, or are unsure whether they do or not. This gap highlights the need for increased awareness and adherence to risk management protocols to safeguard the integrity and sustainability of charitable organisations.

Gaps in involvement

The survey also highlighted that 87% of trustees who responded are involved in risk management within their organisation.

This high level of involvement indicates a strong awareness of the importance of risk management among charity trustees and staff. However, this is not enough to prevent 16% of respondents’ charities from not regularly reviewing their risk registers. This gap underscores the need for continuous education and reinforcement of risk management practices to ensure all charities are adequately protected.

Four key steps to enhance your charity’s risk management

Regularly review and update risk registers: It's crucial that charities regularly review and update their risk registers to account for new risks and changes in the operating environment. Trustees should ensure that risk registers are not only maintained but also actively used as a tool for ongoing risk assessment, mitigation and decision-making.

Provide continuous education and training: Despite the high level of involvement in risk management (87% of respondents), there is still a need for continuous education and training to ensure everyone understands the importance of risk management and their role in ensuring it. Trustees should promote regular training sessions and workshops to keep staff and volunteers informed about the latest risk management practices and the importance of maintaining up-to-date risk registers. This will help reduce the number of charities not regularly reviewing their risk registers.

Embed a risk-aware culture: Creating a culture that prioritises risk management is essential. Trustees should lead by example, demonstrating a commitment to identifying, assessing and mitigating risks. Encouraging open communication about potential risks and fostering an environment where staff feel comfortable reporting concerns can help embed a risk-aware culture within an organisation. Many charities find that having a defined risk appetite helps support a common understanding of the risk culture.

Stay abreast of guidance and best practices: Trustees should make use of available guidance and best practices, such as those shared by the Charity Commission. These resources offer valuable insights into effective risk management strategies and can help trustees ensure their charity is following recommended protocols. Regularly consulting these guidelines can help trustees keep across new developments and ways to incorporate best practices into their risk management processes.

Addressing gaps to enhance resilience

The Charity trustee insights hub survey provides valuable insights into the state of risk management within the UK charity sector. While there are many positive indicators, such as high levels of trustee and staff involvement, there are also areas for improvement around the frequency of risk management policy reviews and alignment with the Charity Commission's guidelines. By addressing these gaps and continuing to prioritise risk management, charities can enhance their resilience, protect their assets and maintain the trust of their stakeholders.

If you would like to explore ways to improve your in-house risk management processes, get in touch with Liz Wright, Becci Goodchild or your usual RSM contact.