PPB Advisory today released a comprehensive report and survey into the risk management practices in the Not-For-Profit sector in Australia and New Zealand.
The survey findings demonstrate that some Not-For-Profit organisations are not effectively managing risk despite the high duty of care owed to their stakeholders. PPB Advisory surveyed a total of 291 Not-For-Profit organisations operating throughout Australia and New Zealand.
While many organisations in the sector have robust and dedicated risk management plans, there is a significant proportion that is potentially exposed due to poor or non-existent risk management strategies and procedures.
Equally, the survey found that members of organisations which effectively managed risk believed that they were more profitable and transparent.
Some key findings of the survey reveal a number of interesting trends:
- 49% of respondents do not have, or do not know if they have an up to date risk management plan;
- Almost one quarter of respondents still believe that risk management is of only moderate importance;
- 61% of respondents state that risk to their organisation has increased over the past five years;
- Over one third of Not-For-Profit boards are not held accountable for managing risk in their respective organisations;
- Almost 50% of respondents believe that budgetary constraints are the main barrier to adequate risk management support.
PPB Advisory Partner, Lisa Bundesen, said that there is certainly room for improvement for many Not-For-Profit organisations, as there is still a lack of sophistication in their approach to risk, and their understanding of risk management.
“In recent years, there has been a significant increase in the Not-For-Profit sector in Australia. The most up to date report, published three years ago, measures total income for the Not-For-Profit sector in Australia at close to $80 billion. We anticipate this number would exceed $100 billion today so we are talking about a very large sector.
“Given the size of the sector, and the fact that a large percentage of income comes from the public (eg government grants and donations), these organisations owe it to their stakeholders to take adequate measures to protect against issues such fraud, public liability, financial risk, environmental concerns – the list goes on.
“The survey highlights a number of interesting trends which will assist Not-For-Profit organisations improve their overall approach to risk management, and their ability to safeguard their organisations and patrons. “Whilst some of these statistics are very concerning, it is important to point out that there is a very large number of Not-For-Profits that do manage risk well, and do have the appropriate plans and procedures in place. Our survey indicates that these organisations tend to be more successful overall. “It also needs to be recognised that Not-For-Profits are today more vulnerable than ever before due to a much wider range of risks. These may include IT fraud, more sophisticated criminal syndicates, and issues such an increase in reputational risk due to today’s 24-hour news cycle.”
“One of the key issues for many organisations is a lack of guidance and understanding of risk at Board level. Many Board members in this sector are volunteers, and their focus is on promoting the cause of the organisation they represent. Whilst commendable, the research clearly demonstrates that more resources need to be dedicated to the understanding and implementation of better risk management practices.”