Simple Risk Analysis Steps for Individual Decisions

• What could go wrong?

• What is the direction (positive or negative); the probability or likelihood or occurrence based on data; and the potential magnitude or severity?

• What did we or can do to make it less likely to go wrong, or cushion the impact if it does?

• What likely positive results central to the mission exist?

• What is the basis to conclude that the risk is acceptable or not?

• What other considerations or consequences to the organization of not proceeding?

These three approaches are not mutually exclusive, and although a land trust’s leaders may choose one of the models as the starting point for their risk management effort, elements of all three approaches are found in most risk management programs. The approaches offer a framework or path that can be helpful to the internal risk management champions.  There is no single way to go about integrating risk management into a land trust.

• This approach invites leaders to begin by focusing attention on the two fundamental, overarching goals of risk management:

  1. Reducing the likelihood of negative outcomes and increasing the likelihood of positive outcomes; and

  2. Preparing the land trust to respond to surprisingly negative or positive events. Subsequent program steps can be structured around or flow from these fundamental goals. 

• Consisting of three elements, this approach focuses on the most common key components in a risk management program:

  1. risk management goals,

  2. a risk management committee and

  3. the risk management plan.

  Risk management goals help set the tone for the program and create a framework for comparing program outcomes and results with the leadership team’s intent and expectations. The risk management committee is the group of leaders who champion the risk management effort, encourage the involvement of others, and ensure the monitoring of both risks and strategies for managing risk. A risk management plan is a summary of risks and strategies, and may also contain information about the land trust’s philosophy about risk-taking and risk management and describe the structure of its risk management program.

• This approach invites leaders to see the design of a risk management program as consisting of 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.  This loop includes steps that

  1. Assess

     1. Articulating and analyzing your assumptions

     2. Articulating your risk tolerance

  2. Evaluate

     1. Asking and answering “what if” questions

     2. Reviewing circumstances, expectations

  3. Manage

     1. Addressing the risks, uncertainty and unexpected

  4. Measure

     1. Risk management is part of success measures