POWERED BY:

TRACY-ELIZABETH CLAYSenior Vice President, Legal Affairs, General Counsel and Board Secretary, Teach for America

Risk Management: Harnessing Risk

#NPPROLeadership

POWERED BY:

Embracing Risk as a Way to Enhance a Culture of Innovation

HARNESSING RISK

#NPPROLeadership

POWERED BY:

o Why Embrace Risk?o What does “embracing risk” mean?

o Operationalizing a Healthy Embrace of Risko Organizational Culture as a Pre-Condition to

Embracing Risko Unpacking the Risk Management Cycle

Agenda

#NPPROLeadership

What does it Mean to Embrace Risk?

• Recognize that Risk and Opportunity are two sides of the same coin

• To develop a structured and strategic approach to managing risks and seizing opportunities that accelerate achieving your mission

So What?Ad hoc Systematic(commitment to address risk issues in a systematic way, recognizing the

spectrum from operational risks to enterprise risks)

Minimum Compliance Maximum Performance (from compliance focus to outcomes, impact, mission-advancement)

Silos Holistic(from department/division focus to stakeholder impact)

Operational Enterprise(from what we do every day to where we are headed, risks to

strategy, and risks at the intersections)

Reactive Proactive (preparedness, resilience, agility)

Traditional Risk Management

• What could go wrong?• What are the

compliance obligations of the organization?

• What steps have been taken to prepare for an emergency?

Advanced Risk Management

• Leaders recognize that risk-taking is necessary to mission fulfillment.

• Risk management is seen as a shared responsibility.

• The discussion of critical risks seeps into regular planning and management activity.

Enterprise Risk Management

• Risk-taking and risk management are considered in relation to the nonprofit’s mission and core strategies.

• Helps leaders become more risk aware over time.

• Helps illuminate risks related to strategy and risks at the intersections of organizational life.

• Leaders aim for a bird’s eye view.

Transactional

Strategic

“Risk” is seen as a negative and risk

management focuses on avoiding risk.

“Risk” is seen as both positive and negative. Risk management is understood as a shared responsibility.

Risk management is about making optimal decisions in

the face of continuing uncertainty.

Integrated

Embracing Risk By Managing it Effectively

Teach For America is Building the Movement toEnd Educational Inequity

Our nation aspires admirably to be a place of equal opportunity. Yet today, where a child is born determines her educational prospects.

16 million children live in low-income

communities across the US

Only 50% of those children will graduate

from high school

Only 8% will graduate from college

by age 24

We believe all children deserve the opportunity to reach their full potential.

We Do This By Growing the Number of Lifelong Leaders Committed to Expanding Educational Opportunity

We offer high-achieving college graduates and professionals an accelerated pathway into the field of education by providing them with rigorous pre-classroom training, ongoing development, and coaching

over the course of their careers.  

We deliver intensive training and ongoing

support to ensure that corps members are truly

transforming the outcomes of their

students

We foster ongoing alumni leadership and collaboration in the

movement to end educational equity

We apply a rigorous selection model to

identify leaders who will significantly impact student achievement

We Currently Support over 11,000 Corps Members who Directly Impact over 750,000 Students in 50 Regions

• Teach For America’s National Footprint

After 15 years of rapid growth, our work has become more complex, interdependent, and siloed. Proactively managing risk helps us be as prepared as possible to achieve our priorities.

Pillars of Teach For America’s Risk Management Program

Shared Data and Knowledge to help our teams glean insights & shape their priorities visions

Single Platform and Vocabulary to enhance cross-functional awareness and collaboration

Common Approach and Assessment to systematically monitor our environment

Teach For America will know when to embrace risk in

pursuit of educational equity.

Vision for Risk Management at Teach For America

Embracing Risk has Enabled Teach For America to More Proactively Assess the Evolving Education Reform

Landscape

Effective Risk Management Cycle

Identify Risks

Prioritize Risks

Manage Risks

Monitor Risks

Organizational Culture: Critical Pre-Condition to Embracing Risk

What’s in Your Culture when it comes to Risk?

Teach For America Culture

• Core Values

• Strategic Clarity

• Comfortable with Rigor

Identifying Risks

Identify Risks

Prioritize Risks

Manage Risks

Monitor Risks

How Well Does Your Organization Understand its Context?

External Context• Social, cultural, political,

legislative, regulatory, financial, technological, economic, and competitive environment

• Key drivers and trends that will have an impact on your ability to achieve objectives

• Relationships with, perceptions & values of external stakeholders

Internal Context• Governance, organizational structure,

roles & accountabilities• Policies, objectives, strategies• Capabilities & resources• Info/Technology systems• Organizational culture• Contractual relationships• Relationships with, perceptions &

values of internal stakeholders

Adapted from ISO 31000:2009, Risk management – Principles and guidelines

Ways of Unearthing the Risks in Your Landscape

• Research

• Surveys

• Focus Groups

• Mapping exercises

Risk Categories are Key

Strategic: Risks that could truly hobble TFA

as an enterprise or limit our ability to achieve our

vision/mission

Operational: Risk due to how effectively we

execute on an operational activity

Financial: Risk related to unexpected impact to our funding model or expenses

Brand: Risk related to perception of TFA

among various constituent groups

Legal: Risks related to regulatory or legal

action; failure to correctly document, enforce or adhere to

contractual arrangements; inadequate management of non-contractual rights or obligations

Cultural: Risks that impact our

organization’s cultural fabric, core values and operating norms.

Prioritizing RisksIdentify

Risks

Prioritize Risks

Manage Risks

Monitor Risks

Not all Risks are Created Equal. . .

Risk Prioritization Dimensions

Definition • Risk management plans are relevant, well defined, and implemented

Likelihood ImpactManagementEffectiveness

• Chance of risk actually manifesting as negative/positive consequence on TFA’s ability to progress toward 2015 priorities (judged in context of TFA taking no action to mitigate risk)

• Magnitude of impact on TFA’s ability to achieve its mission and progress toward 2015 priorities

KeyQuestions

• Role Clarity: Do senior leaders, & staff have clear understanding of roles/responsibilities in RM?

• Info Flows: • What type of information

would we need to manage this risk?

• Who is responsible for getting this information and what would it take to get it?

• Who needs to be consulted – regional/functional, central organization? Who has decision-making rights?

• Time Horizon: How long would it take to develop, align on, and implement a plan of action?

• Odds: What percentage chance of occurrence does this risk have from now until 2015?

• Volatility: How quickly does the likelihood of this risk change? What drives this volatility?

• Control: Is it within our capacity to control the likelihood of this risk over the next few years?

• Breadth of Impact: Does risk have impact across multiple functions and geographies?

• Scalability: How large can this risk get? How quickly could that happen?

• Sensitivity: How big of a disruption will this risk be to our team progressing toward 2015 goals if it occurs? To TFA as a whole org?

• Other Players: Who else is impacted by this risk and how? Are there ripple effects that impact your team?

21

Ris

k Pri

ori

tiza

tion D

imensi

ons

Like

lihood

Impact

Man

ag

em

ent

Eff

ect

iven

ess

1 532 4

Extremely unlikely:“Once in a lifetime”

Extremely likely: “This is

coming our way”

Moderately likely: “It’s about 50-50”

1 532 4

Very low impact: “No big deal”

Very high impact: “This is

crippling and scary”

Moderate impact: “Inhibiting but not disabling”

1 532 4

Very low ME: “We do practically nothing on this”

Very high ME: “This is old hat –

we’re experts here”

Moderate ME: “We manage this ok…could be better”

. . .and you should manage them accordingly

Risk Level

Ris

k M

an

ag

em

en

t Eff

ecti

ven

ess

(Likelihood + Impact)

1 1032 4 5 6 7 8 9

4

1

2

3

5

“Structural” risks:Ensure sufficient continued investment and velocity

• Do our plans include sufficient strategies/ resources dedicated to addressing these risks

“Low-Priority” risks: Continually monitor risks and evaluate investment levels• Do risks have the potential to quickly change in profile?

• Should we divert resources to other projects or opportunities?

“High-Priority” risks:Act now to address these risks. • Are we acting fast enough

(velocity)? • Do we have enough investment

(resources and management capacity) to address these quickly?

“Emerging” risks:Evaluate risk volatility and whether investment is required•Do risks have the potential to quickly change in profile?•Should resources be put into building up management effectiveness?

Introducing . . . The Risk Map

Teach For AmericaSample Risk Management MapR

isk

Pre

pare

dness

Lack of shared vision for

change at school or

district level

New state requirements for additional pre-service hours

for teacher certifications

School District layoffs

Competing reform

initiatives

Risk Level

“Structural”“Low-Priority

“High-Priority”“Emerging”

Lack of Qualified

School and District

Leadership

Ongoing Risk Management

Identify Risks

Prioritize Risks

Manage Risks

Monitor Risks

Creating an Approach that Works

STRUCTUREWhich team will be

responsible for key categories of risk?

EnterpriseCross-functionalOperational PROCESSES

How will teams go about the task of risk analysis, planning and implementation?

How will you integrate risk management into existing processes and systems?

Teach For America – The Journey Continues

• Unclear risk ownership

• The Polaroid problem

• Full Board engagement

The policy of being too cautious is the greatest risk of all.

Jawaharlal Nehru

APPENDIX

www.nonprofitrisk.org

Melanie L. HermanExecutive DirectorNonprofit Risk Management Center

Author of 15+ books on risk management

Senior consultant on 40+ risk assessments for nonprofit clients

Leads the Center’s ERM consulting work

Speaker on ERM and other risk management topics

#AICPANFPFEF

About the CenterMission StatementWE HELP NONPROFITS COPE WITH UNCERTAINTY.Our mission is to help nonprofit leaders become risk aware. We help

leaders identify and appreciate critical risks and take action. We offer RISK HELP™, Web tools, in-person and virtual training, and custom consulting solutions.

The Center is a trusted advisor on risk issues ranging from employment practices, to governance and risk oversight, enterprise risk management, fraud prevention, financial risk management, and youth protection. The Center has a 20-year history of advising best-in-class nonprofits and delivering practical resources to help nonprofits pursue their missions.

The Nonprofit Risk Management Center is a 501(c)(3) nonprofit organization led by a volunteer Board of Directors.

www.riskwise.ca Diana Del Bel Belluz:• Helps executives in complex organizations to implement systematic and sustainable risk management

practices. • Since 1990, has been doing leading-edge risk work for a wide range of organizations in the corporate,

government and nonprofit sectors. • Advances the field of risk management by teaching university courses and management training

seminars, speaking at conferences and authoring publications on a wide range of risk management topics.