In today's dynamic and uncertain landscape, the management of risk has become an essential component of organizational success.
Within our Mimeta programs, where innovation, agility and learning are key drivers, the ability to effectively identify, assess, and mitigate risks is crucial. By adopting a proactive approach to risk management, we will try to safeguard projects, enhance decision-making processes, and ultimately, drive sustainable value for the stakeholders involved.
Capacity Buliding mitigates risk and increases risk appetite.
A risk is an uncertain event or set of events that, should it occur, will have an effect on the achievement of objectives. Risk is measured by a combination of the probability of perceived threat or opportunity occurring and the magnitude of its impact on objectives. Risk management is the systematic application of principles (Guidance and appetite), the delegation of authority, approaches for the distribution of risk, guidance to risk owners to justify risk-taking, processes to identifying and assessing risks, and then planning and implementing risk responses (within a Plan-Do-Check-Act Cycle).
Risk Appetite:
The risk appetite is the amount of risk Mimeta, or a subset of it, for instance within a program, is willing to accept. Risk appetite is the amount and type of risk that an organization is prepared to pursue, retain, or take to meet its strategic objectives. It represents a balance between the potential benefits of taking risks and the potential negative consequences if those risks materialize. In defining a risk appetite for Mimeta, it's crucial to recognize the interdependence within our operations. This interdependence extends to funding from various sources and the involvement of independent organizations in program implementation.
Matters of Zero Risk appetite:
Securing funding is contingent upon Mimeta maintaining a reputation as a trustworthy manager of financial resources. It's imperative that we prevent any misappropriation of funds for purposes such as terrorist financing, corruption, or activities that undermine environmental sustainability, human rights, inclusivity, or gender equality.
Risk appetite in perusing intended outcomes:
However, it's important to acknowledge the complexity of the environment in which the implementing partners operate and the challenges in achieving intended outcomes. There is a general understanding that Mimeta may have a higher tolerance for threats when pursuing its intended outcomes due to the challenging nature of the issues at hand. Nevertheless, this tolerance does not diminish the commitment to ethical conduct and responsible management of resources.
With a higher risk appetite in complex circumstances comes demands on innovation and learning
With acceptance of higher tolerances for threats in processes of pursuing intended outcomes, comes implicit expectations on increasing the understanding of why the goals were or were not reached. Another such expectation is that when working in these complex environments, one may also seek a large degree of innovation in order to reach the defined goals. For such interventions, a project has similarities to research projects and should be followed by research questions and methodologies. The project is considered as you are testing an idea within a field of practice. This is also not possible without a higher degree of risk appetite.
Low risk appetite in perusing intended outcomes in complex circumstances
On the contrary, will a low-risk appetite in pursuing intended outcomes under complex circumstances foster interventions with a high degree of process safety. Like when repeating established practices, or when incremental innovation approaches focus on marginal steps of improvements. In these instances, learning outcomes will be a matter of registration and documentation of the process and benefits from the outcomes.
Capacity building is an effort to minimize risk
Additional information comes from the due diligence of capabilities in the implementing organization. The main assets of Mimeta are fund management, knowledge development and capacity building. Mimeta’s real contribution is to minimize risks in the implementing processes of pursuing intended outcomes. The risk appetite will therefore also depend on the degree of capacity development that the agreement between implementing organizations and Mimeta contains.
Responses to Risk:
Responses to risk, such as threats and opportunities, are dependent on our ability to identify risks. Risk identification is the determination of what could pose a risk, and we do this in a process where we describe and list sources of risk. The Risk register is to record those uncertain events that would affect one or more programme objectives. It also keeps a record of the risk exposure for each of those events. It also keeps a record of the Risk responses, defined as management actions needed to respond to them. In the register, we also separate facts that exist now from uncertain events that may happen. These are identified based on a prior assessment of the relationship between the uncertain event and the possible impact of that event occurring. These could be based on risk estimation (predetermined standards, target risk levels, interdependencies etc.) or risk evaluation, as the process of understanding the net effect of identified threats and opportunities on an activity when aggregated together.
Response strategies:
As generic responses to identified threats and opportunities, you have different strategies. One involves avoiding the threat altogether by eliminating the associated risk in uncertain situations or by withdrawing from the situation entirely. Alternatively, when seeking to reduce a threat, the focus shifts to mitigation efforts aimed at decreasing the likelihood of its occurrence or minimizing its potential impact. Another response to threats is the transfer of risk to others. However, it's important to carefully consider the cost and justification of such transference. Acceptance of risk exposure is another viable approach, where both the probability of occurrence and the potential impact are acknowledged. In such instances, adapting to the risk becomes necessary. Encouraging collaboration through sharing is also a valuable strategy, wherein risks are distributed among stakeholders based on a pain/gain basis. Furthermore, contingency planning is often employed, where a risk is accepted initially but plans are made to act later if the identified situation arises. In such instances, planning also involves the financial aspects of the contingency action.
Risks to assess throughout the process could concern
Stakeholder behaviors
Managerial issues
Delivery performance of projects
Emerging changes in the programme environment
Capacity and ability in the defined constituency to prepare for changes
Manage risks with a direct impact on one or more outcomes of benefit
When and how:
In Mimeta, the due diligence process is essential for identifying and mitigating potential risks within our programs. This process is conducted prior to entering into collaborations and is also mandatory for program participants to conduct when involving other parties through grant reallocation, work processes, and other means. The goal of this effort is to enhance the capacity of all stakeholders involved in achieving the program's objectives, thus the process should be considered valuable as a capacity-building effort for organisations. All involved parties will have access to the tools and be given guidance on the methodology used for risk assessment and management.
Themes:
The purpose of due diligence is to establish a shared understanding of risks:
including those related to non-acceptable practices such as funding terrorism and corruption,
normative issues like gender equality,
organizational governance,
organizational capabilities,
and network assets.
We also assess risks related to achieving the intended outcomes of the initiative,
the risk profile of human rights violations that may occur as responses toward the activities,
and the civic space characteristics of the environment where the initiative operates.
Process of involvement:
Information for the assessment is gathered through a combination of self-evaluation, documentation review, and interviews, before listing in the risk register. The assessment is shared and discussed. Setting the risk appetite is considered in a collective process. The management system includes defining responsibilities, possible actions and the making of a contingency plan.
Use for decision-making:
Based on the assessment of these risk characteristics, we develop a comprehensive risk index for the initiative that synthesizes the identified risks into a structured format for easier understanding and decision-making. The information derived from this indexing process is then communicated to decision-making bodies and potential sponsors of specific programs or projects. This data serves as a crucial basis for their decision-making process, enabling them to make informed choices regarding their involvement and support for the initiative.
