Faithful Risk Management

 
 

FFchurchWith close to 40% of Americans attending a weekly faith service, the role of religious institutions—churches, mosques, synagogues, temples—still weighs heavily on American society. For many, a house of worship is a respite from the rest of the world, allowing for introspection, spiritual fulfillment and fellowship with others. On days when religious services are not offered, these buildings can act as community centers, offer support programs for the needy or host outreach programs.

Despite the important role these institutions play, few people are talking about the risks they face in their operations. There are countless websites telling people how to grow a congregation but none devoted to the risks that come along with it. Many churches are renowned for their imposing architecture and stunning interior designs, but how many religious leaders have analyzed the uncertainties surrounding the operation of such a building? And while finances certainly are not ignored, how many churches have taken a look at how consistently their collection plates fill each week?

This is ironic, given that the idea of managing risk is mentioned in many holy texts. The New Testament has Jesus’ parable of the talents, where the diligent investing of two servants made their master very happy, while the servant who buried his money in the ground (and skirted risk entirely) was banished. The Book of Proverbs in the Old Testament gives advice for making loans to those you don’t know (mainly, don’t do it). And the Qur’an provides, with a level of detail that exceeds most banks, instructions for why a loan should be made and how it should be processed.

As risk management is becoming commonplace in the corporate world, houses of worship, to their own detriment, are lagging behind significantly. For a risk management expert, this is a challenge and an opportunity. The challenge is to take for-profit practices and apply them to the non-profit world; the opportunity comes in providing an invaluable service to the community. Unlike the corporations listed on the NASDAQ or S&P 500, which deal in different industries and thus face widely different risks, houses of worship all have similar challenges to consider, even if their theologies could not be more distinct.

Take financial risk, for example. For a religious building, there are two main sources of revenue: offerings and outside payments for usage of the property. In order to keep its doors open and the lights on (as well as providing its leaders and administrators with healthy bank accounts), these sources have to provide enough revenue to match all expenses. If they dry up, the doors may close for good.

The same goes for operational risk. There are dozens of uncertainties surrounding a building’s infrastructure, especially given that some have existed for centuries. Will the roof hold up for another winter? Are the heating and cooling systems up to snuff? What will happen if a minister or leader decides to leave? All of these can spell ruin, especially for a church that is not prepared.

And, of course, there’s reputational risk. There seems to be no other field in which the actions of one entity can cast such a negative view on everyone else. Stories of religious extremism, abuse by clergy or fraud in the name of God help paint a dour picture of all mainstream religion; combating this is necessary if these institutions want to survive.

Thus, houses of worship—be they mono- or polytheistic, reformed or orthodox, in a high temple or an arena—face numerous risks with complete obliviousness. But this doesn’t have to be the case.

Risk managers who are actively involved with places of worship are uniquely qualified to assist their congregations in facing uncertainties and developing plans to respond to risks. While this may be daunting, given that there are so many elements that may need to be analyzed, it is not a task that has to be done alone. In fact, nearly every religious institution already has a tried-and-true method of facing a large, complex challenge—it’s called a committee.

Forming a risk committee could be the best move a congregation makes for its business operations. By bringing together worshipers who know what goes on in their building and have the ingenuity to identify areas of risk, the committee can determine the uncertainties an institution faces and devise ways to handle them.

What is so effective about a risk committee is that it allows for diversity but does not need to be comprised of risk management experts. Since most houses of worship already have committees made up of members for other areas of the church—finance, communications, worship and music to name a few—these members are already aware of risks; they just haven’t brought it to the forefront of their minds.

If chaired by a risk manager who is skilled at leading others through the risk identification process (using the Delphi method, for example) and is able to develop ideas with the others on the team, forming a risk committee will not be a large ordeal.

Just like with any organization, uncertainties can be managed if put into the right hands. For a risk manager, this can be an excellent opportunity to take on a new challenge while also providing a worthy service for their community.

 

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About the Author

Ande Clumpus is a freelance writer who has consulted churches across the country.

 
 

2 Comments

  • Let's not forget cyber risks (church websites that collect donations), political risk (missionaries traveling to other countries), investment risk (funds held for future use) and many other risks and opportunities associated with Enterprise Risk Management. Great article, I hope it's read widely!

     
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    Church Risk Management | Risk Management.watch cartoons

     
 

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