powered by: tracy-elizabeth clay senior vice president, legal affairs, general counsel and board...
TRANSCRIPT
POWERED BY:
TRACY-ELIZABETH CLAYSenior Vice President, Legal Affairs, General Counsel and Board Secretary, Teach for America
Risk Management: Harnessing Risk
#NPPROLeadership
POWERED BY:
Embracing Risk as a Way to Enhance a Culture of Innovation
HARNESSING RISK
#NPPROLeadership
POWERED BY:
o Why Embrace Risk?o What does “embracing risk” mean?
o Operationalizing a Healthy Embrace of Risko Organizational Culture as a Pre-Condition to
Embracing Risko Unpacking the Risk Management Cycle
Agenda
#NPPROLeadership
What does it Mean to Embrace Risk?
• Recognize that Risk and Opportunity are two sides of the same coin
• To develop a structured and strategic approach to managing risks and seizing opportunities that accelerate achieving your mission
So What?Ad hoc Systematic(commitment to address risk issues in a systematic way, recognizing the
spectrum from operational risks to enterprise risks)
Minimum Compliance Maximum Performance (from compliance focus to outcomes, impact, mission-advancement)
Silos Holistic(from department/division focus to stakeholder impact)
Operational Enterprise(from what we do every day to where we are headed, risks to
strategy, and risks at the intersections)
Reactive Proactive (preparedness, resilience, agility)
Traditional Risk Management
• What could go wrong?• What are the
compliance obligations of the organization?
• What steps have been taken to prepare for an emergency?
Advanced Risk Management
• Leaders recognize that risk-taking is necessary to mission fulfillment.
• Risk management is seen as a shared responsibility.
• The discussion of critical risks seeps into regular planning and management activity.
Enterprise Risk Management
• Risk-taking and risk management are considered in relation to the nonprofit’s mission and core strategies.
• Helps leaders become more risk aware over time.
• Helps illuminate risks related to strategy and risks at the intersections of organizational life.
• Leaders aim for a bird’s eye view.
Transactional
Strategic
“Risk” is seen as a negative and risk
management focuses on avoiding risk.
“Risk” is seen as both positive and negative. Risk management is understood as a shared responsibility.
Risk management is about making optimal decisions in
the face of continuing uncertainty.
Integrated
Embracing Risk By Managing it Effectively
Teach For America is Building the Movement toEnd Educational Inequity
Our nation aspires admirably to be a place of equal opportunity. Yet today, where a child is born determines her educational prospects.
16 million children live in low-income
communities across the US
Only 50% of those children will graduate
from high school
Only 8% will graduate from college
by age 24
We believe all children deserve the opportunity to reach their full potential.
We Do This By Growing the Number of Lifelong Leaders Committed to Expanding Educational Opportunity
We offer high-achieving college graduates and professionals an accelerated pathway into the field of education by providing them with rigorous pre-classroom training, ongoing development, and coaching
over the course of their careers.
We deliver intensive training and ongoing
support to ensure that corps members are truly
transforming the outcomes of their
students
We foster ongoing alumni leadership and collaboration in the
movement to end educational equity
We apply a rigorous selection model to
identify leaders who will significantly impact student achievement
We Currently Support over 11,000 Corps Members who Directly Impact over 750,000 Students in 50 Regions
• Teach For America’s National Footprint
After 15 years of rapid growth, our work has become more complex, interdependent, and siloed. Proactively managing risk helps us be as prepared as possible to achieve our priorities.
Pillars of Teach For America’s Risk Management Program
Shared Data and Knowledge to help our teams glean insights & shape their priorities visions
Single Platform and Vocabulary to enhance cross-functional awareness and collaboration
Common Approach and Assessment to systematically monitor our environment
Teach For America will know when to embrace risk in
pursuit of educational equity.
Vision for Risk Management at Teach For America
Embracing Risk has Enabled Teach For America to More Proactively Assess the Evolving Education Reform
Landscape
Effective Risk Management Cycle
Identify Risks
Prioritize Risks
Manage Risks
Monitor Risks
Organizational Culture: Critical Pre-Condition to Embracing Risk
What’s in Your Culture when it comes to Risk?
Teach For America Culture
• Core Values
• Strategic Clarity
• Comfortable with Rigor
Identifying Risks
Identify Risks
Prioritize Risks
Manage Risks
Monitor Risks
How Well Does Your Organization Understand its Context?
External Context• Social, cultural, political,
legislative, regulatory, financial, technological, economic, and competitive environment
• Key drivers and trends that will have an impact on your ability to achieve objectives
• Relationships with, perceptions & values of external stakeholders
Internal Context• Governance, organizational structure,
roles & accountabilities• Policies, objectives, strategies• Capabilities & resources• Info/Technology systems• Organizational culture• Contractual relationships• Relationships with, perceptions &
values of internal stakeholders
Adapted from ISO 31000:2009, Risk management – Principles and guidelines
Ways of Unearthing the Risks in Your Landscape
• Research
• Surveys
• Focus Groups
• Mapping exercises
Risk Categories are Key
Strategic: Risks that could truly hobble TFA
as an enterprise or limit our ability to achieve our
vision/mission
Operational: Risk due to how effectively we
execute on an operational activity
Financial: Risk related to unexpected impact to our funding model or expenses
Brand: Risk related to perception of TFA
among various constituent groups
Legal: Risks related to regulatory or legal
action; failure to correctly document, enforce or adhere to
contractual arrangements; inadequate management of non-contractual rights or obligations
Cultural: Risks that impact our
organization’s cultural fabric, core values and operating norms.
Prioritizing RisksIdentify
Risks
Prioritize Risks
Manage Risks
Monitor Risks
Not all Risks are Created Equal. . .
Risk Prioritization Dimensions
Definition • Risk management plans are relevant, well defined, and implemented
Likelihood ImpactManagementEffectiveness
• Chance of risk actually manifesting as negative/positive consequence on TFA’s ability to progress toward 2015 priorities (judged in context of TFA taking no action to mitigate risk)
• Magnitude of impact on TFA’s ability to achieve its mission and progress toward 2015 priorities
KeyQuestions
• Role Clarity: Do senior leaders, & staff have clear understanding of roles/responsibilities in RM?
• Info Flows: • What type of information
would we need to manage this risk?
• Who is responsible for getting this information and what would it take to get it?
• Who needs to be consulted – regional/functional, central organization? Who has decision-making rights?
• Time Horizon: How long would it take to develop, align on, and implement a plan of action?
• Odds: What percentage chance of occurrence does this risk have from now until 2015?
• Volatility: How quickly does the likelihood of this risk change? What drives this volatility?
• Control: Is it within our capacity to control the likelihood of this risk over the next few years?
• Breadth of Impact: Does risk have impact across multiple functions and geographies?
• Scalability: How large can this risk get? How quickly could that happen?
• Sensitivity: How big of a disruption will this risk be to our team progressing toward 2015 goals if it occurs? To TFA as a whole org?
• Other Players: Who else is impacted by this risk and how? Are there ripple effects that impact your team?
21
Ris
k Pri
ori
tiza
tion D
imensi
ons
Like
lihood
Impact
Man
ag
em
ent
Eff
ect
iven
ess
1 532 4
Extremely unlikely:“Once in a lifetime”
Extremely likely: “This is
coming our way”
Moderately likely: “It’s about 50-50”
1 532 4
Very low impact: “No big deal”
Very high impact: “This is
crippling and scary”
Moderate impact: “Inhibiting but not disabling”
1 532 4
Very low ME: “We do practically nothing on this”
Very high ME: “This is old hat –
we’re experts here”
Moderate ME: “We manage this ok…could be better”
. . .and you should manage them accordingly
Risk Level
Ris
k M
an
ag
em
en
t Eff
ecti
ven
ess
(Likelihood + Impact)
1 1032 4 5 6 7 8 9
4
1
2
3
5
“Structural” risks:Ensure sufficient continued investment and velocity
• Do our plans include sufficient strategies/ resources dedicated to addressing these risks
“Low-Priority” risks: Continually monitor risks and evaluate investment levels• Do risks have the potential to quickly change in profile?
• Should we divert resources to other projects or opportunities?
“High-Priority” risks:Act now to address these risks. • Are we acting fast enough
(velocity)? • Do we have enough investment
(resources and management capacity) to address these quickly?
“Emerging” risks:Evaluate risk volatility and whether investment is required•Do risks have the potential to quickly change in profile?•Should resources be put into building up management effectiveness?
Introducing . . . The Risk Map
Teach For AmericaSample Risk Management MapR
isk
Pre
pare
dness
Lack of shared vision for
change at school or
district level
New state requirements for additional pre-service hours
for teacher certifications
School District layoffs
Competing reform
initiatives
Risk Level
“Structural”“Low-Priority
“High-Priority”“Emerging”
Lack of Qualified
School and District
Leadership
Ongoing Risk Management
Identify Risks
Prioritize Risks
Manage Risks
Monitor Risks
Creating an Approach that Works
STRUCTUREWhich team will be
responsible for key categories of risk?
EnterpriseCross-functionalOperational PROCESSES
How will teams go about the task of risk analysis, planning and implementation?
How will you integrate risk management into existing processes and systems?
Teach For America – The Journey Continues
• Unclear risk ownership
• The Polaroid problem
• Full Board engagement
The policy of being too cautious is the greatest risk of all.
Jawaharlal Nehru
APPENDIX
www.nonprofitrisk.org
Melanie L. HermanExecutive DirectorNonprofit Risk Management Center
Author of 15+ books on risk management
Senior consultant on 40+ risk assessments for nonprofit clients
Leads the Center’s ERM consulting work
Speaker on ERM and other risk management topics
#AICPANFPFEF
About the CenterMission StatementWE HELP NONPROFITS COPE WITH UNCERTAINTY.Our mission is to help nonprofit leaders become risk aware. We help
leaders identify and appreciate critical risks and take action. We offer RISK HELP™, Web tools, in-person and virtual training, and custom consulting solutions.
The Center is a trusted advisor on risk issues ranging from employment practices, to governance and risk oversight, enterprise risk management, fraud prevention, financial risk management, and youth protection. The Center has a 20-year history of advising best-in-class nonprofits and delivering practical resources to help nonprofits pursue their missions.
The Nonprofit Risk Management Center is a 501(c)(3) nonprofit organization led by a volunteer Board of Directors.
www.riskwise.ca Diana Del Bel Belluz:• Helps executives in complex organizations to implement systematic and sustainable risk management
practices. • Since 1990, has been doing leading-edge risk work for a wide range of organizations in the corporate,
government and nonprofit sectors. • Advances the field of risk management by teaching university courses and management training
seminars, speaking at conferences and authoring publications on a wide range of risk management topics.