What is risk? Why does it matter?

What Is Risk?

In risk management, risk is defined as the possibility of an event, incident or condition that will have an impact, either negative or positive, on the achievement of an organisation’s objectives (ISO 31000:2018; IRM Risk Management Definitions). 

Traditional risk management tends to be very organisation-oriented, focusing on the impact of an event, incident or condition on the organisation’s finances, reputation, operational abilities and overall strategic goals. This often leads to decision-making premised on the need for self-preservation, perpetuating a siloed mentality where survival or success is a solo endeavour. It can make it harder to work collaboratively across organisations, share responsibility and accountability and create a culture of collective effort. 

Traditional approaches often reflect competitive and individualistic values due to their focus on financial and operational protection of an organisation. But at The Social Change Nest, we approach risk differently. As a fiscal host we take on risk so that others don’t have to. We spend a lot of time thinking and exploring how to support risk and the people taking it, in the best possible way.  Although we do think about potential negative impacts on ourselves as an organisation, we balance this with the potential positive impacts for wider civil society. Rather than focusing on the potential for negative outcomes, we prioritise the attitude that risk-taking holds opportunities for innovation and social impact beyond ourselves. We view risk as a dynamic and multifaceted concept, shaped by the complexities and nuances of the environments in which we operate.

Our Approach to Risk 

The Social Change Nest exists to tear down the barriers that prevent people from creating change through providing fiscal hosting, capacity building and infrastructure support to changemakers around the world. And we believe in standing alongside those we support as equal partners  – including when it comes to sharing the risk burden. This might be making sure liabilities around risk are carefully managed and manifested fairly in our contracts, to navigating the insurance industry alongside groups to find the right protection for them

We have consciously chosen to centre risk management in a way that aligns with our mission and values, making sure we understand the liabilities and accountabilities in the work we do and taking a trauma-informed approach to risk responsibility.

We haven’t found a risk management approach that fits the work we do, so have developed our own approach based on the following principles: 

• Living: Our risk management approach is not static, but will evolve, as we evolve as an organisation.

• Trauma-informed: Our work is embedded in systems that have caused trauma to communities, generations, families and individuals. All our work is underpinned by a trauma informed approach and our approach to risk management should always take into account the risks around furthering or alleviating trauma.
• Human: We focus on reducing and minimising the impact of the risk on people and the planet. We recognise humanity as fragile, resilient and full of hope and undertake a risk approach that acknowledges our humanity.
• Radical: We seek to challenge and change the systems that do not work for people and strive for a more equal and equitable world. This means being bold and courageous when assessing risk.
• Contextualised: We  seek to understand and place risk in its context, recognising the nuances and complexities involved.

   

Our Appetite for Risk 

We operate in high-risk areas because what people are doing on the ground is inherently risky. Consequently, our risk appetite is high. We believe that not working and supporting these ‘high-risk’ areas poses a greater risk to civil society and social justice than supporting the work itself. 

We have:

• Zero Tolerance for Fraud and Financial Crime: We have zero tolerance for fraud, money laundering, and financial crime.
• Zero Tolerance for Intentional Harm: We have zero tolerance for intentional harm, including actions causing physical, emotional, or psychological harm to individuals or communities.
• High Tolerance for Innovation: We have a high tolerance for innovating and stepping into spaces where there are uncertainties and environments traditionally perceived as high-risk, where we see potential for social impact and change.
• Power Dynamics: We work hard to avoid unhealthy power dynamics that have traditionally placed risk inappropriately on groups or individuals. We carefully consider risks we can take on as an organisation, aiming to protect all the groups we host. When risks are passed onto individuals or groups, we provide support to help manage these risks appropriately.
• Upholding Ethical and Moral Stances: We have a high tolerance for upholding ethical and moral stances and activity, even when traditional systems and structures may consider these too risky or out of line with existing oppressive and abusive structures and systems. However, we balance this with recognising the impact that stepping outside these structures may have on the groups we support.

   

Overall, we take a contextual approach to risk appetite and tolerance which is:

• Proportionate
• Transparent
• Relationship-based
• Prioritises groups’ needs
• Anchored in a deep understanding of the tensions in the funding landscape and existing oppressive systems

   

By integrating these into our risk management approach, we seek to ensure that our work not only supports, but also empowers the communities we serve. We believe anchoring risk management in this way can drive positive change and innovation within civil society.