Under the volcano
Iceland is back in the news again; but this time not as a result of a broken banking system.
The volcanic eruption that has grounded flights in a way no climate change campaign ever could has, according to analysts, cost the UK economy £500m so far with airlines losing some £130m a day. Could this risk have been managed and mitigated? Probably not – and, unsurprisingly, a number of insurance companies are playing the force majeure card.
However, most risks faced by charities are identifiable and manageable and this Guide to Risk Management is partly a tribute to all the excellent work that has been done by not only these organisations, but also by their advisers and professional membership bodies in demonstrating that, most of the time, disaster can be averted with some sensible planning and appropriate responses. A particular example of this has been the way in which the sector has buckled down and kept going during the recent recession and the double whammy of increased beneficiary demand and reduced incomes.
The annual survey published each autumn by accountants PKF with CFDG is an excellent barometer of how the sector is dealing with risk and finding solutions. The current edition of Managing risk: keeping in control, while pointing out that while risk management processes had put charities ‘ahead of most other sectors in anticipating what has happened over the last year’, was less upbeat about their effectiveness. It continues: ‘It is one thing to spot a problem, but that does not mean that you can resolve it. Major lessons have been identified about why risk management was not as effective as hoped in some cases.’
I am particularly grateful to CFDG and the Charity Investor’s Group for all the input and suggestions they have given the Caritas team in coming up with a range of articles that address some of the issues raised in the CFDG/PKF survey. Suggested solutions from the authors include ‘access to external knowledge through networking, selection of trustees or advisers, devoting additional time to reviewing risks and mitigations, or introducing mechanisms to check that the most important controls actually operate’, and the topics selected for inclusion have reflected these.
No guide to risk management would be complete without some brave charities sharing their own experiences and best practice and I have very much enjoyed working with Christian Aid and the Children’s Society in hearing more about some of the issues they have faced and learned from.
It is unclear at what point the volcano cloud presents zero risk to air traffic; planes were airborne by 21 April. However, turning to rules that can be managed, we can conclude the challenges presented by the economic downturn have played a significant part in raising the profile of risk management as an essential tool for the sector’s survival and development.
Author: Clarissa Dann
Clarissa Dann was the editor of Caritas as well as an HR and management online service,he People Bulletin until July 2011.
She is now the editor of the specialist trade finance magazine, Trade and Forfaiting Review which can be viewed at www.tfreview.com but does write on charity finance and investment from time to time.
Clarissa has a background in legal and professional publishing, as well as business journalism and holds an MBA from
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