The Risk-Reward Equation: How to Assess Risks as a Board

Introduction: Calculated Risks for Lasting Success 

For boards, taking risks can feel daunting—but avoiding them altogether is often a greater gamble. As organizations evolve, boards must consider bold moves that keep them relevant and innovative. However, not all risks are created equal. The key is knowing how to evaluate risks thoughtfully and strategically. 

In this article, we’ll explore practical steps boards can use to assess risks, balance rewards, and make informed decisions that align with their mission and goals. 

Why Assessing Risk Matters 

Every decision a board makes carries some level of risk. Whether it’s launching a new program, investing in technology, or entering a partnership, understanding potential outcomes is critical. Poorly assessed risks can lead to financial loss, damaged reputations, or wasted resources. Conversely, well-calculated risks can position your organization as a leader, driving growth and impact. 

Assessing risks helps boards: 

  • Identify opportunities worth pursuing. 
  • Avoid unnecessary pitfalls. 
  • Align decisions with strategic goals. 
  • Gain buy-in from stakeholders by demonstrating a thoughtful process. 

  Five Steps to Evaluate Risks 

  1. Clearly Define the Opportunity 
  • What is the specific opportunity or challenge the board is considering? 
  • What are the objectives, and how do they align with your mission? 
  • Example: If launching a new member benefit program, define the intended outcomes (e.g., increased retention, added value for members). 
  1. Analyze Potential Risks 
  • Break down risks into categories: financial, reputational, operational, and strategic. 
  • Ask: What are the worst-case, best-case, and most likely scenarios? 
  • Use a risk assessment matrix to prioritize risks based on likelihood and impact. 
  1. Consider the Rewards 
  • What are the potential benefits? Are they short-term or long-term? 
  • Weigh the upside against the downside: Is the reward worth the risk? 
  • Example: If investing in virtual education technology, rewards might include increased accessibility and new revenue streams. 
  1. Engage Experts and Stakeholders 
  • Consult internal and external stakeholders, industry consultants, or similar organizations that have faced comparable decisions. 
  • Seek diverse perspectives to uncover blind spots. 
  • Example: Before launching a hybrid event model, seek feedback from members and staff to understand potential challenges and opportunities. 
  1. Develop a Contingency Plan 
  • If the risk doesn’t pan out, what’s the exit strategy? How will you mitigate losses? 
  • Plan for adjustments: What metrics will you monitor to determine if the initiative is working? 
  • Example: Create a pilot program with clear benchmarks for success and failure. 

Tools to Aid Risk Assessment 

These tools are most effective when applied through a structured discussion.  

  1. SWOT Analysis Use this classic tool to identify strengths, weaknesses, opportunities, and threats related to the decision. This structured approach ensures a balanced evaluation. 
  1. Risk Assessment Matrix Plot risks on a grid based on likelihood (low to high) and impact (low to high). Focus your attention on high-likelihood, high-impact risks. 
  1. Scenario Planning Imagine multiple scenarios (best, worst, and moderate outcomes) to help the board visualize the range of potential outcomes. 

Real-Life Example: A Board’s Strategic Pivot 

A national association board considered expanding into international markets. The potential reward? Increased membership and global influence. The risks? High upfront costs, cultural barriers, and potential dilution of their brand. 

To assess the risk, the board: 

  • Conducted a SWOT analysis to weigh internal capabilities against external challenges. 
  • Consulted with international groups and industry experts to gauge feasibility. 
  • Launched a small pilot program in one country with clear metrics for success. 
  • Developed an exit plan to minimize financial losses if the program didn’t meet benchmarks. 

Ultimately, the pilot succeeded, giving the board the confidence to expand further. By starting small and evaluating risks thoroughly, they turned a bold idea into a sustainable strategy. 

Conclusion: Take the Leap, Thoughtfully 

Risk is inevitable, but it doesn’t have to be overwhelming. By taking a structured approach to risk assessment, boards can make confident decisions that drive innovation while protecting their organization. The reward of taking calculated risks is often worth the effort—but only if you assess, plan, and execute wisely. 

Need Help Evaluating Risks? I offer customized workshops to help boards navigate the risk-reward equation. Together, we’ll assess opportunities, weigh risks, and create action plans that align with your mission and goals. Contact me to learn more! 

Discussion: How does your board navigate the tension between innovation and risk aversion? What’s the boldest risk your board has taken—and what did you learn from the outcome? 

Marie Stravlo
Marie Stravlo

With over 15 years of experience in non-profit governance and operations, Marie Stravlo specializes in helping organizations build strong, effective boards that drive mission-focused success. She is passionate about creating governance structures that empower volunteer leaders to set strategic priorities and clear policies—allowing staff and volunteers to execute the organization’s goals effectively.

Her commitment to non-profit excellence is demonstrated by her credentials, including the Certified Association Executive (CAE) designation and her role as both a graduate and faculty member of the US Chamber of Commerce Institute of Organizational Management (IOM). These achievements reflect her dedication to best practices, ethics, and sustainable leadership in the sector.

Through Governance Gal®, Marie provides expert consulting on governance best practices. She has helped numerous non-profits strengthen their bylaws, policies, and procedures, improve board orientations, restructure for efficiency, revitalize volunteer engagement, and develop strategic plans that drive long-term success.

As the CEO of Avlo Solutions, an association management company, Marie and her team support non-profits with daily operations such as bookkeeping, member services, board and volunteer engagement, elections, event planning, and more. She also serves as the Executive Director for two association clients (one national and one state chapter), a role she has held for the past nine years.

Marie’s ability to connect with volunteers in a meaningful way is rooted in her own experience serving as a volunteer. Having held leadership roles as president, vice president, treasurer, trustee, and director for various local and national non-profits, she understands the challenges and perspectives of both staff and volunteers. This unique insight allows her to facilitate solutions that benefit all stakeholders.

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