Risk management is aimed at reducing the ‘gross level’ of risk identified to a ‘net level’ of risk, in other words, the risk that remains after appropriate action is taken. This template has been created to illustrate a practical way of recording in a risk register how this reduction in level might be achieved by the charity. In example 1, the gross risk is identified as the lack of return/diversity of investment portfolio and rated as high. After identifying the procedures for managing this risk, the net risk has been rated as medium. Trustees need to form a view as to the acceptability of the net risk that remains after management. Example 1
Risk area/risk identifiedlack of return/diversity of investment portfolio Likelihood of occurrence (score)probable (4) Severity of impact (score)major (4) Overall or ‘gross’ riskhigh (20) Control procedure• investment policy set by trustees • written instructions to FSA authorised investment adviser • quarterly reviews by trustees Retained or ‘net’ riskmedium Monitoring processperformance reports reviewed quarterly by trustees Responsibilitytrustees and treasurer Further action requiredquarterly agenda item for trustee meetings Date of reviewquarterly Example 2
Risk area/risk identifiedunsatisfactory fundraising Likelihood of occurrence (score)probable (4) Severity of impact (score)major (4) Overall or ‘gross’ riskhigh (20) Control procedure• financial appraisal of new projects • benchmarking of returns achieved • budget reporting by fundraising activity Retained or ‘net’ riskmedium Monitoring process• financial reporting by fundraising activity • quarterly reporting by fundraising manager to trustees/CEO Responsibilityfundraising manager/CEO Further action required• new initiatives to be approved by trustees unless included in current business plan • review of regulatory compliance of current methods Date of review• when appropriate • next trustee meeting