How to assess risk for charities working internationally
Charities working internationally may face particular risks due to their operating environment including the application of financial sanctions, greater levels of corruption or criminal activity and the presence of terrorists, proscribed groups or designated entities.
As a risk-led regulator, we focus on areas of higher risk and we expect the same of trustees.
Our risk assessment tools
As the International Charities Engagement Team, we often get asked, what does risk assessment mean in practice and how regularly should it be carried out?
With over 168,000 charities registered in England and Wales and about 17,000 operating internationally, there isn’t a one-size-fits-all answer to these questions.
There's no universally recognised criteria for assessing and determining risk and ultimately you must decide what is in the best interest of the charity.
But, we have produced risk management tools which may help you effectively manage risks and protect your charity from harm in Chapter 2 of the Compliance toolkit – Due diligence and Monitoring the end use of funds. It also includes:
- a risk assessment checklist (which highlights key issues to think about)
- a risk assessment matrix (which assesses the likelihood, impact and potential controls)
Recent events in 2019 demonstrate how practical our PESTLE analysis tool can be when assessing the risk arising from a range of external factors, and their impact on a charity working internationally.
PESTLE in practice
It is likely that risk assessment will be shaped by a government’s influence on a country’s infrastructure. Following months of protests in Sudan, the long serving president was ousted and arrested in April 2019. Civilians have continued to carry out street protests calling for democracy after a 30-year military rule.
This could have implications for political stability but also tax policy, employment laws and trade restrictions. Charities working in the country will need to consider what risks this could pose to its operations and how they will manage them.
After Venezuela’s economy collapsed in 2014, the country has been plagued by hyperinflation, food and medicine shortages and power outages. It’s estimated that 7 million people are in need of humanitarian assistance and until 2019, there had been a ban on aid.
For trustees now thinking about providing support in Venezuela, they will need to consider how risks associated with economic decline, hyperinflation and cost of living will impact their charity. In addition, certain trade, immigration and financial sanctions imposed by the UK government will impact on the delivery of charitable aid.
Health is a key external risk factor trustees should consider. Yemen is currently suffering from a large scale cholera outbreak, so far 3000 people have died. Since 2019, the country has seen a sharp spike in the number of suspected cases – with 1,000 children a day infected over a two-week period in March alone.
Charities working in the country will need to ensure they support their beneficiaries but also manage any health risks posed to staff or volunteers who are providing assistance. Blockades on Yemen’s air and sea ports may also inhibit the ability to deliver medical supplies.
Charities working internationally will need to consider the availability of products and services as well as compatibility with their own technologies. Shortly after the April 2019 bombings in Sri Lanka, the government blocked all social media to stop the spread of false news reports.
Charities using these channels for communication will need to ensure controls are put in place to mitigate these risks should they experience this in-country.
In April 2019, Brunei introduced strict new Islamic laws, making sex between men punishable by stoning to death. The new measures also cover a range of crimes including punishment for theft by amputation.
Laws such as this can influence the risks for charities working internationally with beneficiaries who may be affected by the changes or any staff or volunteers deployed in-country. Such legislation will vary from country to country, so each project will require a different risk assessment.
When setting up a new project, trustees will need to have an awareness of climate change and seasonal weather and terrain variations. Mozambique was recently hit by two cyclones in six weeks, causing devastating floods and killing over 1,000 people.
Charities working in or planning to provide assistance in the country will need to consider these environmental factors which may affect service delivery methods. Some areas might be completely inaccessible, with damaged roads and transport systems posing a risk to staff and goods.
A PESTLE analysis is just one of our tools that may help when assessing the risk arising from external factors, when working internationally.
It's important to remember that risk assessment should be a dynamic process which is conducted regularly when working in changeable environments. It is a fundamental part of how a charity plans, manages and responds to the risks of its activities and operating environment – not just a tick box exercise.
Have a look at chapter 2 of the Compliance Toolkit, where you can find the tools referenced in this blog and many others, which should help you get started on your risk management process.
Keeping a regular check on our guidance will also help you manage your charity and its policies effectively. The simplest way to do this is to sign up for GOV.UK email alerts. You’ll be asked for an email address, and can choose how often you’d like to be alerted when we make any changes to our website content.
Krishna Soni, Charity Commission