Risk management and the board

Trustee boards should take steps to manage any risks affecting the charity. The management of risk is an important part of a board’s responsibility: it can help ensure the proper use of a charity’s assets and funds and help trustees ensure they are furthering the charity’s purposes in the most effective way.

The Charity Commission recommends that it is good practice for all charities to carry out an annual risk assessment and to commit to reporting on the findings. 

For charities that are required to comply with the SORP, there is a legal requirement for trustees to report on risk in their annual report.

Risk management can help identify potential opportunities as well as prevent difficulties. The format of a risk management review will vary from charity to charity.

In general, a risk review involves identifying risks, assessing and prioritising risk (how likely and how severe) and taking appropriate measures to head off or manage risks (sometimes called 'mitigating actions').