Financial Risk Management for Non-profits
Expert-defined terms from the Professional Certificate in Financial Management for Non-profits course at Stanmore School of Business. Free to read, free to share, paired with a professional course.
Accountability refers to the responsibility of non #
profit organizations to their stakeholders, including donors, beneficiaries, and the general public, to ensure that funds are used efficiently and effectively, and that goals and objectives are met, with transparency and integrity. Related terms include transparency, governance, and stewardship. In the context of financial risk management, accountability is crucial in ensuring that financial decisions are made with the best interests of the organization and its stakeholders in mind.
Accrual accounting is a method of accounting that recognizes revenues and expens… #
Related terms include cash accounting, Generally Accepted Accounting Principles (GAAP), and Financial Accounting Standards Board (FASB). Accrual accounting is important in financial risk management as it provides a more accurate picture of an organization's financial position and performance.
Actuarial analysis refers to the use of statistical and mathematical techniques… #
Related terms include risk assessment, probability, and statistical modeling. Actuarial analysis is used in financial risk management to estimate the likelihood and potential impact of adverse events, and to develop strategies to mitigate or manage those risks.
Asset allocation refers to the process of dividing an investment portfolio among… #
Related terms include investment policy, portfolio management, and risk tolerance. Asset allocation is a key component of financial risk management, as it helps to balance the potential for returns with the potential for losses.
Audit committee refers to a group of individuals responsible for overseeing an o… #
Related terms include governance, risk management, and internal control. The audit committee plays a critical role in financial risk management by ensuring that an organization's financial reporting is accurate and reliable.
Budgeting refers to the process of planning and managing an organization's fi… #
Related terms include financial planning, forecasting, and variance analysis. Budgeting is a fundamental component of financial risk management, as it helps to ensure that an organization has sufficient resources to achieve its goals and objectives.
Cash flow management refers to the process of managing an organization's cash… #
Related terms include cash flow forecasting, cash flow statement, and liquidity management. Cash flow management is critical in financial risk management, as it helps to ensure that an organization has sufficient cash to meet its financial obligations.
Compliance refers to the process of ensuring that an organization is in compl… #
Related terms include regulatory risk, risk management, and internal control. Compliance is an essential component of financial risk management, as it helps to minimize the risk of non-compliance and associated penalties and reputational damage.
Credit risk refers to the risk that a counterparty will default on its ob… #
Related terms include credit assessment, credit scoring, and counterparty risk. Credit risk is a significant concern in financial risk management, as it can result in significant financial losses if not properly managed.
Currency risk refers to the risk that changes in exchange rates will affe… #
Related terms include foreign exchange risk, exchange rate risk, and hedging. Currency risk is a key consideration in financial risk management, particularly for organizations that operate globally or have international transactions.
Derivatives refer to financial instruments that derive their value from an under… #
Related terms include hedging, risk management, and speculation. Derivatives can be used in financial risk management to hedge against potential losses or to speculate on potential gains.
Diversification refers to the process of spreading investments across different… #
Related terms include asset allocation, portfolio management, and risk management. Diversification is a key component of financial risk management, as it helps to reduce the risk of significant losses due to any one investment or asset class.
Donor risk refers to the risk that donors will not provide the expected level of… #
Related terms include fundraising risk, revenue risk, and donor relationships. Donor risk is a significant concern in financial risk management for non-profit organizations, as it can impact their ability to achieve their mission and objectives.
Endowment refers to a fund or asset base that is invested to generate inc… #
Related terms include investment management, asset allocation, and spending policy. Endowments are an important component of financial risk management, as they provide a source of sustainable funding and help to mitigate the risk of financial uncertainty.
Financial planning refers to the process of developing a comprehensive plan to a… #
Related terms include strategic planning, financial management, and risk management. Financial planning is a critical component of financial risk management, as it helps to ensure that an organization has a clear direction and strategy for achieving its financial goals.
Financial reporting refers to the process of preparing and presenting financial… #
Related terms include financial accounting, auditing, and compliance. Financial reporting is an essential component of financial risk management, as it provides stakeholders with a transparent and accurate picture of an organization's financial position and performance.
Financial risk management refers to the process of identifying, assessing, and m… #
Related terms include risk assessment, risk mitigation, and risk monitoring. Financial risk management is a critical component of an organization's overall risk management strategy, as it helps to protect its financial assets and achieve its financial objectives.
Funding risk refers to the risk that an organization will not have access to suf… #
Related terms include revenue risk, financial sustainability, and fundraising. Funding risk is a significant concern in financial risk management for non-profit organizations, as it can impact their ability to achieve their mission and objectives.
Governance refers to the system of rules , practices, and processes by whi… #
Related terms include leadership, management, and compliance. Governance is an essential component of financial risk management, as it helps to ensure that an organization is managed in a responsible and ethical manner.
Grant management refers to the process of managing grants, including the appl… #
Related terms include fundraising, grant writing, and grant administration. Grant management is a critical component of financial risk management for non-profit organizations, as it helps to ensure that grant funds are used effectively and efficiently.
Hedging refers to the use of financial instruments, such as derivatives ,… #
Related terms include risk management, speculation, and arbitrage. Hedging is a key component of financial risk management, as it helps to reduce the potential impact of adverse events or market fluctuations.
Internal control refers to the policies, procedures, and processes implemented b… #
Related terms include risk management, governance, and compliance. Internal control is an essential component of financial risk management, as it helps to ensure that an organization's financial systems and processes are operating effectively and efficiently.
Investment management refers to the process of managing an organization's inv… #
Investment management is a critical component of financial risk management, as it helps to ensure that an organization's investments are aligned with its financial objectives and risk tolerance.
Liquidity risk refers to the risk that an organization will not have sufficient… #
Related terms include cash flow management, liquidity management, and funding risk. Liquidity risk is a significant concern in financial risk management, as it can impact an organization's ability to meet its financial obligations and achieve its financial objectives.
Market risk refers to the risk that changes in market conditions, such as… #
Related terms include market volatility, market uncertainty, and hedging. Market risk is a key consideration in financial risk management, particularly for organizations that are exposed to market fluctuations.
Operational risk refers to the risk of loss or damage resulting from inadequa… #
Related terms include risk management, internal control, and compliance. Operational risk is a significant concern in financial risk management, as it can impact an organization's ability to achieve its financial objectives and maintain its reputation.
Portfolio management refers to the process of managing an organization's inve… #
Related terms include asset allocation, investment management, and risk management. Portfolio management is a critical component of financial risk management, as it helps to ensure that an organization's investments are aligned with its financial objectives and risk tolerance.
Regulatory risk refers to the risk of non #
compliance with relevant laws, regulations, and standards, including the risk of penalties, fines, and reputational damage, using compliance programs and audit functions. Related terms include compliance, governance, and risk management. Regulatory risk is a significant concern in financial risk management, as it can impact an organization's reputation and financial position.
Risk assessment refers to the process of identifying, analyzing, and prioritizin… #
Related terms include risk management, risk mitigation, and risk monitoring. Risk assessment is a critical component of financial risk management, as it helps to identify and prioritize potential risks and develop strategies to manage or mitigate them.
Risk management refers to the process of identifying, assessing, and managing <b… #
Risk management is a key component of financial risk management, as it helps to protect an organization's financial assets and achieve its financial objectives.
Strategic planning refers to the process of developing a comprehensive plan to a… #
Related terms include financial planning, risk management, and governance. Strategic planning is a critical component of financial risk management, as it helps to ensure that an organization has a clear direction and strategy for achieving its financial goals.
Sustainability refers to the ability of an organization to maintain its finan… #
Related terms include financial sustainability, social responsibility, and environmental sustainability. Sustainability is a key consideration in financial risk management, as it helps to ensure that an organization is managed in a responsible and sustainable manner.
Treasury management refers to the process of managing an organization's cash<… #
Related terms include financial management, risk management, and liquidity management. Treasury management is a critical component of financial risk management, as it helps to ensure that an organization has sufficient liquidity and funding to meet its financial obligations.
Value #
at-risk (VaR) refers to a statistical measure of the potential loss of an investment or portfolio over a specific time horizon, using models such as parametric and non-parametric methods, to estimate the expected shortfall (ES) and conditional value-at-risk (CVaR). Related terms include risk management, portfolio management, and hedging. VaR is a key metric in financial risk management, as it helps to quantify the potential risk of an investment or portfolio.