May 6, 2011

Distinguish between systemic risk and little bits of risk here and there. Systemic risk is the really big, bad thing. The BP Gulf oil spill fiasco is an example of systemic risk. Apparently the company had a history of poor safety…that would be systemic.

As your organization plans – whether short or long-range – determine where your systemic risks lie. And then significantly reduce those. Don’t be quite as concerned about the little bits of risk here and there.

Redundancy is an important thing. When there’s risk, organizations should build in redundancy for protection. How much redundancy was there in BP’s Gulf oil spill or at Fukushima?

But what protects the redundancy? More redundancy, Yes, effective organizations anticipate redundancy failure – and so build in more redundancy.

So imagine really good planning, whether short- or long-term: Identifying systemic risks and evaluating the levels of risk. Introducing redundancy for protection. Ensuring more redundancy to protect the redundancy. Yes, that’s the cost of doing business well, whether you’re a for-profit or nonprofit.

About Simone Joyaux

A consultant specializing in fund development, strategic planning, and board development, Simone P. Joyaux works with all types and sizes of nonprofits, speaks at conferences worldwide, and teaches in the graduate program for philanthropy at Saint Mary’s University, MN. Her books, Keep Your Donors and Strategic Fund Development, are standards in the field.

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