Melanie Herman Lockwood
Top 10 Risks according to Melanie Lockwood Herman, of Nonprofit Risk Management Center. And she should know. Melanie provided the following list at the AICPA Not-for-Profit Industry Conference last month.
- Uncertainty regarding financial sustainability. The less cash on hand, the greater the danger when revenue is late or unreliable;
- Ineffective fiscal and risk oversight;
- Incomplete appreciation of fraud risk. There are three general kinds: against the nonprofit, by the nonprofit and through the nonprofit;
- Allowing a leader/staff member/volunteer to be “above suspicion.” A casual glance through the news should be enough to put this one to rest;
- Lack of succession planning. On average, boards spend two hours a year on CEO succession planning;
- Ineffective departure planning and execution. Nothing lasts forever;
- Naïve crisis planning. People don’t get to choose the source or cause of their next crisis;
- Dissatisfied donors (poorly understood/managed donor relationships);
- Unmanaged conflict on the board; and,
- Lack of practical (well-understood) governance practices. This can cover every conceivable item, from conflict of interest through gift acceptance, and anything in between.
