Risk Appetite Statements for Charity & NFP Boards

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Develop clear, defensible risk appetite statements for charity and not-for-profit Boards to guide decisions and strengthen governance.

A risk appetite statement defines how much risk a Board is willing to accept in pursuit of its objectives.

For not-for-profits, risk appetite:

• Guides decision-making
• Sets boundaries for management
• Demonstrates governance maturity to regulators and funders

A well-articulated appetite reduces uncertainty especially in complex or values-driven decisions.

Without a clear risk appetite:

• Decisions are inconsistent
• Escalation is subjective
• Boards intervene too late
• Management operates on assumption, not clarity

Risk appetite provides shared language between Boards and executives.

Many statements fail because they:

• Are overly generic
• Avoid difficult trade-offs
• Do not include safeguarding thresholds
• Are disconnected from reporting and escalation

If appetite does not influence decisions, it is ineffective. 

1. Clear Board Positioning

Statements should be explicit, for example:

• Very low appetite for harm to beneficiaries
• Low appetite for regulatory non-compliance
• Moderate appetite for innovation aligned to purpose

Clarity is more important than comfort.

For charities and community services:

• Safeguarding must sit at the lowest appetite
• Escalation triggers must be explicit
• “Zero tolerance” must be operationalised, not rhetorical

Risk appetite should align to:

• Mission and purpose
• Growth and service expansion
• Funding dependency and sustainability

This allows Boards to consciously accept risk not drift into it.

Effective appetite statements:

• Are mapped to risk categories
• Inform reporting thresholds
• Trigger escalation when breached

This is where many frameworks fail. 

Boards approve appetite.
Management operates within it.
Breaches are escalated, not explained away.

We work with Boards and executives to:

• Facilitate Board-level appetite discussions
• Draft clear, defensible statements
• Integrate appetite into reporting and escalation
• Align safeguarding and duty of care obligations

The result is decision clarity and governance confidence.

Speak with AIRM Consulting