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Governance Reimagined: Organizational Design, Risk, and Value Creation by David R. Koenig

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Chapter 13

The Governance of Risk

Like the game we call football, fútbol, or soccer, our organizations are a complex interaction of agents in a network working to achieve certain objectives—to score some goals. We rely on team members, coaches, fans, cleat makers, and others who can help us in this pursuit. At the same time, we constantly have to defend against both small and large attacks—problems that are emerging internally or externally, and in many cases against our competitors, which provide products and services that can be substituted for ours. Our daily operations are always in motion, transitioning and evolving, seeking to make the most of our opportunities and responding as best we can to the threats we see.

At nonprofits and other organizations not traditionally thought of as being in a score-keeping arena, the language of attack, defense, and competition might seem inappropriate. If helpful, we can substitute words like service, advocacy, efficiency, and impact. But, in the end, the goal itself remains the same: a good result from our efforts. We're looking to create and deliver value to those we seek to serve.

Let's begin this next stage of our work with a focus on the governance of risk on both halves of the playing field.

Risk and Risk Management

Risk, for most people, is uncertainty, especially in the domain of losses. But, for us, risk is two-sided, with account given to both gains and losses. Consider a situation in which you find yourself walking down a hallway. ...

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