Risk management 'a paper exercise for charities'

Risk management is little more than a paper exercise for almost a fifth of respondents to the annual risk survey carried out by the Charity Finance Directors' Group.

Managing Risk - Protecting your Assets also reveals that 25 per cent of the 402 finance directors and trustees from across the UK who took part believe their charities do not have risk policies - an increase of one percentage point on the 2006 figure.

The survey, carried out in association with accountancy and business advisory firm PKF, reports that nearly 60 per cent of respondents are concerned about embedding risk management in their organisations – five times more than are worried about their charities' financial sustainability. Of those, 33 per cent say they think risk management is little more than a paper exercise.

Only 28 per cent of respondents describe their risk-management policy as "embedded and working effectively", with more than half of trustees only carrying out risk assessments on an annual basis.

Keith Hickey, chief executive of the CFDG, called on sector chief executives to make sure their organisations had effective risk management policies and to recognise that risk management required ongoing attention and regular reviews.

"Embedding risk management in a charity has to be driven by the chief executive with the full backing of the trustees," he said. "It takes that level of priority to ensure steps are taken seriously and its importance recognised."

Other significant findings from the report include:
  • Staff turnover in the sector is about 15 per cent for managers and 19 per cent for other staff.
  • Twenty-five per cent of charities do not make regular Gift Aid submissions and more than half have not provided specific training to their staff.
  • Thirteen per cent of charities hold trustee or director indemnity policies, and 2 per cent employ staff but do not hold employee liability insurance.
  • A quarter of charities have experienced adverse publicity in the past two years, but only 43 per cent have plans for dealing with critical threats to their reputation that could be put into action immediately.
  • Twenty-four per cent of charities have reported one or more incidents of fraud and 34 per cent have experienced attempted break-ins in the past two years. However, only 25 per cent of fraud victims have carried out fraud risk assessments, and only about half of charities that have suffered theft or damage have increased their security levels.
  • Fifty-nine per cent of charities that own their own premises (55 per cent of the total) have had a security assessment in the past three years, and 38 per cent have some sort of security presence, especially those based in cities.

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