Charities' risk assessment 'could be better'

Many charities do not have adequate procedures in place to spot risks, according to the author of a report published today by the Charity Finance Directors' Group and accountancy firm PKF.

Richard Weighell, head of the business risk services team at PKF, said charities needed "a shift in attitude" to risk management.

His report, Managing Risk - A Healthy Appetite, shows that the types of risk that charities find most difficult to manage are changes in government or local government policy and reductions in contract income.

However, they find it more straightforward to manage fraud, ineffective management or leadership, failure to meet objectives and major IT failures.

"Most charities do have processes in place to consider what risk exposure they can accept, review the risks they face and also implement steps to mitigate them," Weighell said. "But some are realising that their approach is too reactive and periodic to properly safeguard their organisation."

The report shows that three-quarters of charities do not believe that risk management is embedded in their organisation, and that half only review the level of risk they are exposed to on an annual basis.

Keith Hickey, chief executive of the CFDG, said the report showed charities had a low appetite for risk.

"Only 10 per cent consider their appetite for risk is high," he said. "In the current economic climate, where funding and support will be harder to come by, such comfort zones need to be addressed.

"Charities need to strengthen their risk management so that more risk can be taken without increasing real exposure."

To order a copy of the report call, Denny Coote on 020 7065 0140 or email denny.coote@uk.pkf.com.

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