The test of a leader is the ability to recognise a problem before it becomes an emergency.
Arnold Glasgow. Journalist. 1905-1998.
Risk for organisations investigating collaboration needs to be considered within the context not of the occurrence of an event, but of the impact of that event on the objectives sought from the collaborative practice. This is in line with the definition of risk as “the effect of uncertainty on objectives” noted in the risk management framework developed by the Australian Standards/New Zealand Standards International Organisation of Standardisation (AS/NZS ISO 3100:2009 Risk Management – Principles and Guidelines).
Risk isn’t the probability of a partner losing funding but the chance that this reduced financial income will disrupt your collaborations’ objectives by reducing the capacity of that partner to contribute to the collaboration. Risks arise because organisations and collaborations need to set future objectives against a background of uncertainty.
For individual organisations and collaborations, there is a legal requirement to protect the assets and financial resources of their members by managing risk and the potential for loss. Administrators – including the management committees and boards of not for profit organisations have a legal obligation to identify risks and address them. They must follow through and check that strategies are implemented, and deal effectively with the risk.
Organisations considering any long term collaboration must thoroughly investigate the risks to their own organisation arising from this move, including the impacts on service users and staff. They must also assess the viability and sustainability of the collaboration including its capacity to meet the required objectives. Prospective collaboration partners should incorporate the potential impacts of the proposed collaboration on their own organisation into its risk management plan. Additionally there is also a need to develop with the other collaboration partners a separate risk management plan for the collaboration itself.
In the current environment of low sector wages, economic constraint and increasingly complex service user needs there may also be risk to the sustainability of an organisation if it chooses not to collaborate. This risk should be identified and captured in the organisation’s own risk management plan.
For many organisations in the sector, it will be the level of suitable collaboration that requires the most consideration. And, it is the level of collaboration that will set the level of appropriate risk management. Collaborations that involve substantial financial commitment should always have a well researched, robust and documented risk management plan appropriate to the level of potential loss or negative impact. Seeking legal advice for complex collaborations is also a sound risk management strategy.
Risk management framework
A risk management framework involves four key steps
- Risk identification
- Risk assessment
- Risk treatment/reduction/mitigation
- Risk management plan evaluation/review
Communicate, consult and engage relevant stakeholders. In particular ensure that people at all levels of the organisational structure, service users and key relevant stakeholders are provided with the opportunity to input into risk management scoping and planning. Where appropriate review organisational records and see what risks have been previously identified. Previous experience can be a reasonable guide. Tap into the experience of organisations/collaborations with similar objectives.
Risks must be dealt with according to their order of priority. This is based on the risk of likelihood and the level of impact or consequence. Analysing and classifying risks helps this prioritisation.
- High risk – frequent incidents with severe consequences
- Moderate risk – infrequent incidents with major consequences
- Moderate risk – frequent accidents with minor loss
- Low risk – infrequent accidents with minor injury
Risk treatment or reduction
After the risk has been identified and assessed, it is essential to implement appropriate risk treatment/mitigation. Risk treatment can lower the frequency and severity of incidents
Risk management plan evaluation or review
Once implemented, a risk management framework still needs to be monitored and evaluated. This requires a review of records, incident reports and losses or negative consequences. It is wise to not only develop a sound framework that clearly states the policies and reporting procedures, this framework also needs to be effectively communicated to all organisational stakeholders.
Once you have selected an appropriate Risk Management Framework for your level of collaboration, all stakeholders need to be involved in identifying risks and suitable treatment strategies and these should be documented as soon as possible.