Selecting a Practical Process for Managing Risk in a Land Trust

Selecting one of the following three approaches is the starting point for developing a risk management plan. These approaches are not mutually exclusive. Elements of all three approaches are found in most risk management programs. The approaches simply offer a framework or path that can be helpful to the land trust’s internal risk management champions. The three approaches are: 

1. Goal-oriented approach 

2. Risk program component approach 

3. Process approach 

One way to embrace and understand the discipline of risk management is to focus on the specific goals the land trust is trying to achieve through its risk management program. A goal-oriented approach is straightforward and may appeal to leaders who want to make sure that the risk management program begins with and remains guided by a laser-like focus on specific results. Generally speaking, there are two broad, overreaching goals that guide the development of a risk management program: 

1. Reducing the likelihood of negative results and increasing the likelihood of positive results. For example, land trust leaders may decide to heavily post the boundaries of a conserved property that has suffered repeated trespass and damage by neighbors and others. These boundary markers are specifically intended to decrease the likelihood of future trespass. 

2. Preparing the land trust to respond to surprisingly negative or positive events. For example, land trust personnel may prepare a series of simple, customizable draft press releases that can be sent promptly whenever the violation on conserved land, faces a significant trespass or other issue or when announcing the donation of a key parcel of land in the community. 

There is a tendency among some organization leaders to focus most, if not all, of their attention on the first goal, above, and often on the first aspect of the first goal: reducing the likelihood of negative results. The downside to this approach is that it fails to appreciate the potential for surprisingly beneficial results, and it also fails to appreciate the importance of preparing for downside results that the organization is unable to avoid. While some writers might describe activities under the second goal as falling within the discipline of crisis management, for our purposes, activities that enable an organization to respond effectively when downside risks can’t be avoided are included within the discipline of risk management. 

After defining the specific goals of a risk management effort and making certain to include specific goals under each of the broad headings, above, the next step is to consider how the organization will achieve its risk management goals. For example, the land trust may develop specific policies, identify capacity needs, design training for staff or research critical categories of exposure. The risk management program consists of the organization’s answers to why it is embracing risk management and how it intends to do so, considering both its capacity to engage and its limit of tolerance for negative results. For example, the accredited Columbia Land Trust, working in Oregon and Washington, engaged in a sophisticated planning process that also involved risk analysis, as well as specific risk mitigation activities. The land trust emerged from the process with a matrix that functions as a risk management plan. It lists the organization’s multiple strategies over five years to advance its mission with activities, risks, mitigation strategies and budgets for each year.  

A second common approach to developing a risk management program is to identify the program’s core components and to focus attention on developing each component, in turn. For example, applying a risk program component approach, land trust leaders may decide to establish a program consisting of a risk management committee and a risk management plan. 

As a brief reminder: first, establish goals for each approach, and, second, appoint a risk management committee to take the lead on the process. 

Once the land trust has a committee and goals, one of its first tasks will be to craft a risk management plan that outlines the land trust’s risk management philosophy, goals, objectives, capacity, risk tolerance and core strategies. The risk management committee of a land trust may work on the development of a plan using the risk management template or using an online tool, such as “My Risk Management Plan” developed by the Nonprofit Risk Management Center. The plan may also include sections describing the organization’s risk management activities related to specific categories of risk, such as landowner liability (for example, bodily injury and property damage claims), governance risks, employment practices, financial management, fundraising/donor relations and crisis management. Many risk management plans also include a summary of the organization’s insurance program or at least its philosophy and overall approach to financing insurable risks. 

This approach invites leaders to see the design of a risk management program as a series of sequential steps. The process does not have a beginning and end, but rather is a perpetual loop that continues throughout the lifetime of the organization. Many leaders seeking to improve risk management or undertake a new risk management plan are drawn to a process approach. They prefer to see the risk management discipline as a series of logical steps that organization leaders always follow to ensure that they fully explore and understand the risks facing the organization, as well as possible strategies to address risk. 

With the process approach, there are many potential variations. Some process diagrams include feedback loops for communication, while others include communication as part of one step in the process (for example, “decide what to do and communicate”). A land trust may decide to define its own custom process. Because this iterative, flexible process is not only an approach but also a set of procedures when facing risk that all approaches adopt, the steps are expanded below. 

Figure 1 offers one possible set of steps for a risk management process.

Establish the Context 

The risk management process begins with a focus on things other than risk. In order to recognize risks and take practical steps to manage the organization in the face of risk, leaders must be grounded in the mission and assets of the land trust. In essence, they need to appreciate what is at risk in order to take practical steps to manage it. Recognizing the context for risk requires a clear understanding of overall organizational goals, as well as the strategies selected to achieve those goals. Establishing the context also refers to the culture, history, resources, services and nature of the organization—factors that influence the land trust’s capacity for risk taking, its tendency to embrace risk taking or be risk averse and its ability to implement sound risk management strategies successfully. For example, leaders of a land trust who have faced a series of costly suits by aggrieved employees will have a different perspective on the risks arising from the hiring and supervising of personnel than the leaders of a land trust who have never faced such a suit nor have any staff. And the leaders of a land trust who have faced repeated bodily injury claims from trespassers, licensees and invitees on land trust property will have an understandably cynical point of view about permitting unsupervised use of the land trust’s property. 

Organizational history and experience with loss can be powerful motivators for risk management, and the lack of experience with disgruntled stakeholders, injured plaintiffs or litigation by corporate interests intended to punish or prevent political opposition can lead to apathy about the need for preparation and a structured risk management program. 

Another component of the first step of the risk management process is to consider the commitment from the land trust’s senior leadership. Ideally, the board of directors and any paid staff or most committed volunteers should support and encourage the use of effective risk management techniques. Many experts in the field note that sound risk management starts with the “tone at the top,” while recognizing that organizations that are best prepared to deflect or cope with life’s “what- ifs” are those that view addressing hazards and seizing opportunities as important and shared responsibilities of the entire organization. 

Establishing the context for risk management within a land trust also includes considering the relationships between the organization and key constituency or stakeholder groups. Every land trust relies on the support and participation of organizations from a variety of realms to advance its mission. Keen awareness of the evolving perspectives, expectations and concerns of stakeholders underpins a successful risk management effort in a land trust. An organization that is widely respected and held in high regard by adjacent private landowners, donors, partner organizations and regulators alike will have an easier time protecting its reputation than a land trust that has come under fire for questionable practices or controversial actions or policies.  

Some of the questions leaders might ask to identify and document the context for risk management in a land trust include: 

• What is the board’s view of risk and risk taking? Is risk something to be avoided or a natural part of the organization’s operations and mission? Does it vary depending on context? 

• How supportive are the board of directors and other land trust personnel with respect to the need to increase risk awareness and upgrade the risk management program? Will these key leaders have to be sold on the idea? Is a small minority on the board driving the commitment to better risk management? 

• What barriers or potential barriers exist to the development of a risk management program? What issues will make it particularly challenging for the land trust to establish a risk management program? 

• Are there any signs or motivating factors that will increase the organization’s receptivity to risk management activities? 

• Are stakeholder perspectives, concerns and expectations well understood? Which stakeholders (or stakeholder groups) should be involved in the development of a risk management program? 

• What resources are available to support the land trust’s risk management efforts? At what cost? 

• What other land trusts or similar organizations can internal leaders consult about establishing a risk management program? 

• What organizational strengths will support a risk management program? 

• What organizational weaknesses may impair the land trust’s ability to establish a risk management program? 

• What is the organizational capacity to implement a risk management plan? 

Appraise the Risks (or Identify and Prioritize Risks) 

Risk identification is essentially the process of brainstorming possible future results that differ from assumptions, expectations and goals. A risk identification brainstorming session is likely to ask: What might happen? Why? How? The essential task at hand is to identify possible strategy- or mission-impacting events or situations. Most groups tasked with risk identification grapple with the challenge of making certain that all possible events or situations facing the organization are included and nothing is overlooked. There are several ways of making certain that the leaders of a land trust risk management initiative cover as many bases as possible, while recognizing the impossibility of creating a definitive list. 

Three examples of a risk map appear below. Figure 2 simply shows four quadrants, while figures 3 and 4 illustrate the plotting of actual risk issues and assignment of color-coding based on the team’s assessment of preparedness. 

Figure 2. Risk Map

Figure 3. Risk Map

Figure 4. Risk Map

Usually most risk management is a dynamic combination of all of these steps. Examples of risk management responses aimed at reducing the likelihood or severity of a downside risk include: 

• Posting signs on land trust properties to alert visitors to inherent dangers 

• Providing a detailed map to visitors planning self-guided tours of land trust property 

• Erecting trail markers and path indicators to guide visitors 

• Conducting an orientation for all volunteers who will assist with land trust–sponsored events and programs 

• Conducting thorough environmental due diligence, including soil and water testing, before proceeding with the acquisition of land 

• Installing sprinkler systems in land trust–owned historic properties 

• Written policies and implementation reporting 

• Obtaining waivers of liability from users, if possible, or posting disclaimers, such as “enter at your own risk” 

• Safety training 

Key considerations in designing and selecting risk management strategies include: 

• Does the strategy, policy change or approach suit the culture of the land trust? 

• Can the strategy be implemented consistently? 

• Does the land trust have the resources and capacity required to implement the strategy? 

• What barriers to implementation exist and how will the land trust overcome those barriers and at what cost? 

Act on Your Decision 

Now it is time to implement the top strategies identified in the prior steps. A particular strategy, such as the posting of warning signs indicating dangerous areas, may be selected because it reflects the land trust’s goals of balancing the desire to provide access to land trust property with the concern it has about the potential for preventable accidents and exposure to liability claims. 

Follow Up and Adjust 

As depicted in figure 1, risk management truly is a continuous loop. Each of the five steps of the risk management process is connected to the steps that precede and follow it. The team assigned to risk management should periodically review the techniques and strategies it has selected and implemented and consider whether changed circumstances, outlook or negative reaction to new policies warrant consideration of varying approaches. One of the most important steps in embracing risk management is to commit to learning from past experience, which is especially important when an organization experiences an accident or near miss. It is essential to take time to examine what happened in order to determine whether any changes are required in policy, procedure or common practice, so that a similar incident may be prevented in the future. This examination should not be an exercise to assign blame; rather, it should examine systems and policies for improvements. Consider evaluating the adequacy of risk management policies and strategies at least annually.