Management Consulting for Nonprofits and Social Enterprises

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I like strawberry ice cream, jalapenos, and single malts, but what the heck do they have to do with integrated risk management?

The answer is that just as your flavors need to be integrated, so does your risk management. While no one would ever think of combining strawberry ice cream, jalapenos, and single malt scotch in a single dish (although I suspect someone will try it after reading this blog), in a likewise fashion you should not consider implementing risk management tactics and techniques without first considering whether or not they make sense together.

Integrated risk management is ensuring that your risk management practices make sense together, that they complement each other, and that they are not working at cross purposes. Just like with flavors, more is not always better when it comes to risk management.

Individual risk management practices may be sensible and practical when implemented by themselves, but when combined may be preventing the organization from achieving its main objectives. Likewise, a combination of outcome-based strategies may be making the downside risk of the organization unacceptable.

In a similar fashion, too many risk management strategies can be confusing, just as too many flavours can overwhelm and confuse the palette. As anyone with a pre-teen child knows, the temptation to fill the fast-food franchise refillable soda cup with six different flavours of soda is irresistible, but generally requires a return trip to the soda fountain to dump out the commingled mess and start afresh with a single serving of just one type of soda. More is not always better.

The intelligent risk manager looks for a coherent set of integrated risk management practices that complement each other and work in an integrated fashion. A good risk management implementation combines upside risk practices as well as downside risk practices; it combines a combination of process-based practices with judgment-based practices, and it seeks to manage existing risks as well as potential future risks.

Yes, please serve me strawberry ice cream, a jalapeno-based dish, and single malt. Just don’t do it all at the same time.

Authors: Rick Nason and Omer Livvarcin

Rick Nason and Omer Livvarcin are authors of the book Risk Management for Non-Profit Organizations, published by Business Expert Press

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