Discussion 1:
In the past few months I have been working with a nonprofit religious organization to create a system to handle all incoming funds. Nonprofit organizations are known for frequently depending on the service and commitment of volunteers with very few paid employees. Because volunteers come and go during the week, it can be challenging to oversee important areas such as the internal financial department where fraud could possibly be at risk. A little here and a little there - added with time - and then you hear about it on the news how the church financial secretary stole $411,000 over a span of 19 years (Associated Press, 1996). While this has not happened to this organization before that they are aware of, nor do they contemplate this happening in the future, nevertheless it is a known risk in the industry of many nonprofit organizations. In the article, The Agile Enterprise, stresses the point that a commitment to the status quo creates even more risk (Rice & Franks, 2010).
Even with the best tools, uncertainty is a fact-of-life and business; however, probability - the likelihood of an occurrence for an event - can substitute for certainty which can project more realistic outcomes (Arsham, 2016). The more knowledge that is available, the better the decision-making tool will accomplish the task for dealing with the uncertainties.
To improve the success of this project, there were many risk factors to consider that requires proactive planning and the role of the risk management function by addressing questions that we learned this week in our textbook such as:
1. What could go wrong with volunteers handling cash and other monies collected each week?
2. How do we reduce the impact?
3. What can we do to prevent fraud from happening?
4. What to do if monies are missing.
(Larson & Gray, 2014)
Another way to make sense of it is to simplify, isolate and evaluate (Hammond, Keeney, & Raiffa, Smart Choices, 1999, p. 111). One such way is by using risk profiles that simplifies in ranges or categories, isolates the many possible outcomes so it can be evaluated using probability metrics to decide. A risk profile could outline the alternatives, probability of outcome and risk in an easy to view chart to help deduce the uncertainty (Larson & Gray, 2014). This would address the knowns and the unknowns and allow the opportunity to account for both. The unknowns are the hardest to identify but this is where contingency plans come into play.
To neutralize these threats, a policy and strategy for risk along with contingency plans would be instrumental to be on the proactive side (Larson & Gray, 2014). For example, 1) establishing and reviewing processes, which included a check-and-balance system in place for two people to always handle the money together which might change the likelihood of risk as well as allow for auditing and inspection. This might include establishing an officer's position and assistant that would handle all monies for one term. 2) Incorporating background checks should be included; 3) Tamper proof envelopes to hold monies until both members are available. In addition, putting the envelopes into a safe until the deposit can be made will reduce risks; and 4) Risk assessment online training recommendation for all personnel and volunteers.
While this is just one risk management project, there are many risk factors within a nonprofit organization that should be addressed. The bottom-line is to first acknowledge that there are risks and uncertainties that must be systematically analyzed and review the possible outcomes to create a proactive plan before the risks adversely affect the organization which is the desired conclusion for this project that is still a work in progress.
References
Arsham, H. (2016). Tools for Decision Analysis: Analysis of Risky Decisions. Retrieved from Dr. Hossein Arsham:https://home.ubalt.edu/ntsbarsh/business-stat/opre/partIX.htm
Associated Press. (1996, February 8). Former Secretary Charged with Stealing From Church. Retrieved from Orlando Sentinel:https://articles.orlandosentinel.com/1996-02-08/news/9602080168_1_stealing-from-church-hoying-collection-plates
Hammond, J. S., Keeney, R. L., & Raiffa, H. (1999). Smart Choices. Boston: Harvard Business School Press.
Larson, E. W., & Gray, C. F. (2014). Project Management: The Managerial Process. New York: McGraw-Hill Education.
Rice, J., & Franks, S. (2010, Jan/Feb). The Agile Enterprise. Risk Management, 26-27.
Discussion 2:
The project that I am choosing for this week's post is the project my company has recently launched in order to recruit a doctor to service an area in another state where we once had a doctor. The company is currently losing a considerable amount of money due to the absence of a doctor. The project is to set up a lecture/presentation on a relevant topic that the company specializes in at the local university that is open to doctors and techs in the field in hopes of strengthening the local referring clinics and discretely recruiting potential candidates.
The risk management techniques used to improve the success of the project include Contingency Planning and Opportunity management. The risks for this project include wasting resources by planning and arranging the trip and lecture for little turn out, the trip failing to aid in recruiting a doctor, tying a correlation between the company and the co-sponsor for the event. Prior to setting the project in motion, techniques used were creating a risk profile-asking questions to address what known risks could be encountered and how to be best prepared, and the contingency plan for the risks.
The known unknowns and the unknown unknowns of the project are the level of turn out, number of doctor attendees, the potential of wasting resources, the perceived relationship of the co-sponsor (eliminating a negative connotation). The unknown unknowns of the project are technological challenges, weather issues, and flight issues- delays, mechanical.
The most difficult risks are the unknown unknowns. How to prepare for something that is completely unexpected. The Project Manager neutralizes these risks by allocating a budget for risks (additional nights in a hotel, changes/delays in flights, technological malfunctions) and by knowing the best response to each risk- allowing a budget of time in case of flight changes or weather and having back up forms of programs in the event of incompatibility.