3 Steps to Develop a Risk Management Plan

Precaution is better than cure. It is better to try to prevent a bad thing from happening than it is to repair the damage after the fact. Developing an effective Risk Management Plan is a vital task to keep small issues from growing into enormous losses. A Risk Management Plan helps in four ways. It determines the likelihood of an event occurring, how that event may impact your church, risks associated with specific programs or activities, and how to mitigate the risks as they arise.

To create a risk management plan for your church, follow these three simple steps.

Step 1: Identify

As a church, you may not be able to eliminate all risk. But, it is the responsibility of a church leader to have practical and reasonable safeguards to prevent events that cause harm to your members, volunteers, and property. The first step in developing a risk management plan is to identify all potential risks. Avoid only looking at the problem, but also consider the causes of the problem. Is the risk due to a natural disaster? Or is it caused by a lack of maintenance and regular inspection? Adequately addressing the source should not be ignored, as this provides direction for the second step—classification.

Step 2: Classify

Properly prioritizing the likelihood and severity of each threat is vital when it comes to assessing and classifying risk. This gives you an improved idea of where to allocate your resources. A valuable tool to accomplish this is through a simple Risk Matrix (see table 1).
 

Likelihood of   Occurrence	Level of Severity
		LOW	MEDIUM	HIGH
	LOW
	MEDIUM
	HIGH

 Table 1: Sample risk matrix for grading risks
 
Begin by outlining the risks. Is your church in an area prone to tornados or wildfires? Is there a high chance of theft? Once you have outlined the risks, determine which quadrant makes sense based on the likelihood of its occurrence and the level of severity.
 
Looting a property may fall under Low Occurrence, with a Low severity for a church that doesn’t have much personal property and the concern may not be warranted. However, a fire may be a Low Occurrence, but High Severity; having this type of risk insured would make a lot of sense.
 

Likelihood of   Occurrence	Level of Severity
		LOW	MEDIUM	HIGH
	LOW	Looting property		Fire
	MEDIUM
	HIGH

 
Create a table like the one above. Next, outline potential risks and determine the likelihood of occurrence and level of severity. Consider collaborating with other church leaders in this exercise for a more complete chart.
 

Step 3: Devise

Once the risks have been identified and classified, outline and devise the courses of action. The possible solutions can be narrowed down to four simple strategies:

1. Avoidance: Eliminating the activity, i.e., avoiding the use of 15-passenger vans.
2. Reduction (mitigation): Implementing tactics to lessen the severity or even occurrence of a loss arising, i.e., having a fire extinguisher on-site and regularly inspected.
3. Retention: Accepting the damage and having funds set aside to pay for it when it occurs, i.e., setting money aside to replace broken windows.
4. Transfer: Having a third party accept the risk, i.e., typically, working with your local conference to acquire needed insurance or outsource services.

Having all the risks categorized leads straight into implementation. This includes determining who is responsible for each area of risk and where the funds will come from to mitigate any potential risk. Key church leaders should be involved in this process, including the safety officer, pastor, treasurer, head elder, and other pertinent members who may bring value to the conversation. The implementation phase further provides a framework for deadlines and places the church in a much better position of knowing how they will manage their risk.

Begin Your Risk Management Plan Today

Initial plans are never perfect. As the Risk Management Plan evolves and experience calls for change, continue to review and tailor the strategy as it best fits your organization.

Take time this coming week to meet with your local church leaders to identify, classify, and devise a plan to make your church a safer place to be.
 
For more resources on mitigating risk in your church, visit ARM’s Church Safety Page.