Let’s talk about risk. Not the dramatic cliff-diving kind—the quiet, everyday boardroom variety that decides whether your organization thrives, stalls out, or just fades away.
Plot twist: playing it too safe is also risky. I’ve watched boards obsess over minimizing risk, and honestly? It’s sneakily dangerous.
Underperformance? Risky. Staying cemented in 2019 while your community’s needs evolve? Sooooper risky. I see it constantly—organizations cancel relevant programming to “focus on financial stability,” or boards debate a federal grant for six months, then miss the deadline entirely. (Zoiks!)
Every growth path has its own flavor of uncertainty. The goal isn’t finding the “safe” route—spoiler alert, it doesn’t exist. It’s asking: Which risks are worth taking, and which ones will trip us up?
The organizations thriving right now? They’re using risk as a decision filter, not a stop sign. They’re not avoiding bold choices; they’re getting concrete about which bets are worth placing.
Risk Appetite vs. Risk Tolerance (Yes, They’re Different)
Here’s where I’ve seen boards get stuck: they think risk management means having one big “NOPE” button for anything uncertain. And they muddle two very different concepts.
Risk tolerance sets your absolute boundaries—debt limits, staffing capacity, capital commitments, core values. These are your guardrails, the lines you won’t cross.
Risk appetite is about how hungry you are to make a bigger impact. That new service line will involve risk—is it worth it to you?
I worked with a board that had both nailed down. They established a firm threshold: no matter what, they wouldn’t exceed a 10% operating deficit (tolerance). Then they looked at a new program addressing an urgent community need. It would push them to a 7% deficit—well within their boundary—so they moved forward (appetite). Clear boundaries, clear ambition. No six-month debate spirals.
When you define both, you stop debating whether to take risks and start having better conversations about which strategies actually fit.
Making Risk Oversight Work For You
Risk oversight isn’t a one-and-done checkbox after you approve a plan. It needs to be woven into how you operate.
Monitor continuously, not just when you’re panicking. Pick a few key metrics as your radar system. Don’t wait until the annual retreat to ask how things are going.
Schedule mid-cycle reviews. Plans age faster than avocados. Regular “are we still on track?” check-ins let you adjust before small cracks become full crises.
Think loop, not line. The strongest boards don’t just react to surprises—they expect them. Preparation → formulation → execution → monitoring → repeat. Build adaptation into the process.
The real shift: integrate risk thinking throughout your strategy lifecycle, from napkin scribbles to “holy cow, we’re actually doing this” to reality-checking afterward.
What Bold Choice Are You Avoiding?
A question to sit with this week: What bold choice is your organization avoiding in the name of “being responsible”?
It could be that partnership you’ve been overthinking for months. Maybe it’s the ambitious program that could transform your community. Perhaps it’s finally having that difficult conversation that changes things (see last month’s newsletter on how to distress your team, thoughtfully).
Good risk oversight doesn’t keep you off the dance floor; it helps you know which moves will work and which ones could leave you flat on your face.
The truth? In a world where needs are urgent and resources are scarce, the organizations making the biggest impact aren’t avoiding risk; they’re embracing it.
So embrace the moves that matter, and let me know where the dance takes you!
