Talking about risk leads to better decisions

Image description: Close-up of a sidewalk painted green with the white stripe. The concrete has a substantial crack running across it. Photo by Umberto on Unsplash.

As I recover from knee replacement surgery, I am grateful for my family and community. I feel very fortunate that I have plenty of community support, and I am again reminded of the importance of relationships to get through hard times. I am still not fully back in action and probably won’t be for another month. But I did feel well enough this week to learn from the latest work of Dax-Devlon Ross, who consistently writes about truly crucial topics for nonprofit leaders.

Nonprofit Quarterly just published When Disruption Hits: Making Hidden Risks Visible to Meet the Moment and Move Our Missions Forward and hosted a companion webinar in which Ross discussed new tools he has developed to help groups have fuller, more productive conversations about risk.

Risk is a topic I covered in the strategic planning course that I recently taught. While not always thought of as a planning-related issue, I believe it is important for board members to reflect on and speak frankly about their personal attitudes toward risk. This can help the group determine their collective risk tolerance and identify what mission and values issues are worth taking risks for. Ross agrees and has gone much further to develop a “Risk Posture Spectrum” that board members can locate themselves on. The spectrum includes “unwavering” in commitment to mission despite risks, “protective” of the institution, and more different stances in the face of a threat.

Ross also provides process suggestions to ensure that strategic discussions are informed by articulation of all risks to the organization and the community served, not solely legal and financial risks (which are more commonly raised in the board room). These include moral risk, reputational risk, risks associated with broken trust, and risk of compromising mission impact.

In the article, he notes that disruption typically sparks risk-related governance discussions, using the example of the recent backlash against diversity, equity and inclusion (DEI). He comments that “A shock can teach, but only if a system is willing to learn.” An organization can make a more superficial, transactional decision in response to external threats or disruptions, or the leadership can take a deeper dive to surface complexity and differing opinions. This extra work will support a better decision as well as collective learning and growth. Only through this deeper dialogue can the group build its adaptive capacity and ingrain resilience into its culture moving forward.

I will raise one additional consideration related to an organization’s collective “risk posture.” Where a nonprofit locates itself with regard to risk may also be influenced by its field or ecosystem. A child welfare advocacy group may be able to take a riskier stance if it is a part of a diverse group of child welfare organizations serving a particular community, knowing that other organizations have a lower risk tolerance and are covering complementary aspects of the work. An organization that is the only resource of its kind in a large rural area may be more resistant to taking a risky position given that the community stands to lose its only service provider in this area of service. Further, an organization’s ability to take risks may be impacted by whether they have community allies willing to stand in solidarity with their position.

I am grateful for Ross’s insights on this and other topics. I highly recommend reading his new article.