This is Part 1 of a series. Read the second article in the series.
It is no surprise to many in the sector that “Since the early phases of the pandemic, charities and nonprofits have struggled with increased demand for their services, reduced revenues, declines in charitable giving due to the rising cost of living, ….[1] Ongoing challenges and the uncertain future have left many charities “… in a position where they can only really be reactive and less able to plan for the long term[2]” and little time to respond to future challenges.
Society cannot afford to lose the essential work of charities. According to Dr. MacRae[3] the third sector is, in many ways, the last line of defence in protecting communities. They work in the margins, helping to mitigate social risk that individuals, families, and entire communities are facing.
Risk management is a valuable tool during these turbulent times. As risk is defined as the “effect of uncertainty on objectives”[4], an effective approach is perfectly suited to the current uncertain and volatile environment.
Time, resources, and expertise are all barriers to implementing risk management. Now, more than ever, it is imperative that charities start to implement an effective risk management approach as society cannot afford to lose their services.
DeafBlind Ontario Services’ journey
To demonstrate how charities can realize the benefits of an effective risk management approach while dealing with the common barriers, let’s look at the journey of DeafBlind Ontario Services.
DeafBlind Ontario Services, incorporated in 1989, provides an array of services to people who are deafblind, as well as people who are Deaf, hard of hearing and non-verbal with a developmental disability. Specialized services are customized to each person’s unique needs, method of communication, and goals to live their best life. Their reach extends into remote communities and urban centres across Ontario with supported living homes and customized community services.
As a provincially funded Ontario charity, DeafBlind Ontario Services is accountable to its funder and stakeholders. It continually strives to make the best use of limited funds and focuses maximum possible resources on service delivery. Three years ago, DeafBlind Ontario Services was seeking to improve its decision-making by searching for an affordable risk management approach that would make good sense for them. This meant any approach selected needed to produce benefits quickly.
I had the opportunity to help DeafBlind Ontario Services select an effective risk management approach that was well suited to their organization; Objective Centric Risk and Certainty Management (ORCM). Having implemented ORCM in a variety of organizations over the last decade, I have seen first-hand its effectiveness. It is the only approach I recommend for charities as it makes the best use of limited resources and provides options for addressing the barriers to implementation.
OCRM is scalable to any size organization, integrates with strategy and objectives of the organization, and supports management and board decisions. It consistently delivers reliable information on risks that result in better decisions and increases the chances of achieving the most important objectives.
An overview of the core steps to implement ORCM is below. It was developed by Tim Leech, Risk Oversight Solutions (ROS) in Oakville, Ontario. The ROS framework is a free download at https://riskoversightsolutions.com/resources/.
© Risk Oversight Solutions
Benefits of effective risk management
In implementing a formal risk management approach, DeafBlind Ontario Services faced the common barriers experienced by others in the sector, time, resources, and expertise; exacerbated by implementing during the pandemic. Before delving into their response to barriers, let’s look at the benefits they are receiving that are helping them navigate in today’s environment.
Objective Centric Risk and Certainty Management, as the name implies, is grounded in the objective. It focuses on managing the likelihood key objectives will be achieved and risks are assessed as to their influence on achieving the objective. This approach provided DeafBlind Ontario Services with valuable information on what could promote or hinder their success and focused actions on those that would have the greatest impact.
ORCM is selective in that it focuses on those objectives that are most critical to the success of the organization. This makes the best use of limited resources and allows organizations to deal with immediate needs while maintaining focus on longer-term objectives.
The structure of the ORCM approach fosters collaboration, accountability, and critical thinking. The Finance and Risk Committee convened to implement and maintain ORCM, built on the strengths already embedded in the Executive Management Team. Members represented diverse functions and established a collaborative working style. Respect and attentive listening to all members was demonstrated throughout the implementation and critical thinking and differing opinions were encouraged. This has strengthened their scrutiny of what can get in the way of success, challenged their thinking as to the best action to take that will make a difference, and provided stronger decision-making.
As risks are constantly emerging and evolving, the ORCM approach provided DeafBlind Ontario Services with a process for regularly monitoring and reporting on the progress of objectives, risks impacting progress, and actions being implemented to ensure the path to success continues. DeafBlind Ontario Services now has valuable information to assess if emerging risks are beginning to impact their success. They are in a position to react to current circumstances without losing their focus on long-term sustainability objectives.
Conclusion
Society cannot afford to lose the valuable service provided by charities and there is no better time than now to implement a proven effective risk management approach, such as Objective Centric Risk and Certainty Management.
ORCM will support organizations in balancing the need to respond immediately while not losing sight of objectives critical to long-term sustainability. It will provide reliable information to monitor progress and support decisions that will inform actions. Charities will gain insight into opportunities and risks not previously considered and have a structured approach to acting and monitoring progress toward their most important objectives.
The implementation of the ORCM approach is not without challenges. Tune into our next article, “Navigating Turbulent Times”, Part 2, to discover how DeafBlind Ontario Services addressed the challenges.
Angela Byrne CPA, CMA is enthusiastic about sharing her knowledge and experience and helping others to succeed. She is president of Angela Byrne Consulting Inc., a practice dedicated to working with organizations to manage risks to achieving strategic objectives. Angela has 30 years of practical experience working with a variety of organizations. She is a Chartered Professional Accountant and Certified Management Accountant and holds certifications in risk management assurance, internal audit, and information systems auditing. She can be reached at info@angelabyrnecma.com
[1] Employment and Social Development Canada, News Release, November 22, 2022 “Government of Canada announces National Funders selected to support charities and non-profits”, https://www.canada.ca/en/employment-social-development/news/2022/11/government-of-canada-announces-national-funders-selected-to-support-charities-and-non-profits.html
[2] Karlsson-Brown, Dr. Paula, “Third Sector Resilience is at the Heart of Community Resilience: Making Use of Risk Management”, July 9,2020, University of Glasgow, https://policyscotland.gla.ac.uk/third-sector-and-community-resilience-making-use-of-risk-management/
[3] MacRae, Dr. Claire, “Risk and Resilience”, May 20,2020 https://www.caledonianblogs.net/wise/2020/05/20/risk-and-resilience/
[4] ISO Guide 73:2009 (EN) Risk Management – Vocabulary www.iso.org