Implementing Effective Governance to Address Emerging Risks

Measures to Strengthen Governance

Charities that wish to thrive amid constant change need a governance model that is both robust and responsive.

It’s time to evaluate existing protocols and determine whether your board composition, risk mitigation strategies, and reporting processes meet contemporary standards.

Here are 7 measures all charity trustees should consider:

1. Establish a Dynamic Risk Management Framework

A tailored risk management framework is an essential component of good governance, and trustees have a duty to systematically identify, analyse, and oversee the full spectrum of potential issues. This responsibility underpins every strategic decision.

Changes you need to implement as soon as possible:

• Regular risk assessments – Start by reviewing both traditional and emerging hazards, whether they involve data protection or new financial instruments. Assign probabilities and potential impacts so the board can prioritise.
• Risk registers and monitoring – Maintain an active risk register. Update it whenever significant events occur, or new regulations come into force. Revisit it each quarter to keep trustees well-informed.
• Clear accountability – Allocate responsibility for each risk to specific individuals or committees. This ensures that every vulnerability is monitored, and mitigation steps do not fall through the cracks.

A living risk management process protects your charity’s mission, allowing you to adapt swiftly if circumstances change.

2. Strengthen Cybersecurity Measures

Cyber threats pose enormous challenges. Trustees must ensure that robust controls are in place to prevent malicious intrusions, especially when handling donor and beneficiary data. Guidance from NCVO recommends that charities of all sizes adopt proactive digital security protocols rather than waiting for a breach to occur.

• Secure infrastructure – Implement firewalls, encryption, and multi-factor authentication. Conduct vulnerability assessments to pinpoint weak spots.
• Staff and volunteer training – Teach everyone – from administrators to volunteers – about the basics of cyber hygiene. Phishing emails and unsafe browsing are common entry points for attackers.
• Incident response planning – Develop a step-by-step procedure for containing breaches. The plan should outline notification processes, data recovery steps, and post-incident reviews.

Take into account that an up-to-date cybersecurity policy safeguards critical assets but can also function as a reassurance for stakeholders that you treat their data with the utmost care.

3. Clarify Board Roles and Responsibilities

When each trustee understands their duties, charitable operations become more streamlined and transparent. If things are rather blurry when it comes to deciding who does what in your organisation, now it’s time to steer toward more structured leadership.

Here are three directions you should consider:

• Role descriptions – Create documented outlines for each trustee position. These could specify terms of appointment, skills required, and responsibilities. Having written descriptors encourages accountability and prevents overlapping duties.
• Diverse skill sets – Seek trustees who bring professional experience in finance, law, IT, or marketing. A broad range of abilities helps anticipate risks and foster strategic thinking.
• Regular performance evaluations – Conduct annual reviews of board effectiveness, ensuring that decision-making processes are transparent and aligned with the charity’s objectives.

4. Enhance Financial Oversight and Reporting

Maintaining financial stability is at the heart of any charity’s sustainability. Today, trustees are expected more than ever to uphold stringent financial controls, foster accountability, and maintain an open line of communication about the organisation’s fiscal health.

Let’s take a look at how robust financial oversight should look according to CC26:

• Transparent accounting practices – Adhere to the Charity Commission’s reporting guidelines, which require clarity on sources of income, expenditure distribution, and reserves management.
• Segregation of duties – Assign distinct financial roles – such as bookkeeping, authorisation of payments, and auditing – to different individuals. This separation minimises fraud risks and fosters accuracy.
• Forecasting and budgeting – Regularly update projections and review potential funding gaps. Prompt awareness of shortfalls allows trustees to adjust strategies before challenges become unmanageable.

Transparency is the keyword the Charity Commission emphasises in 2025, so it becomes imperative to have a financial management system in place that can help you prove your organisation is reliable.

Don’t hesitate to ask for specialised help if you don’t have the internal resources to handle financial reporting.

Otherwise, you may deal with penalties, missed opportunities, and a decrease in donor trust.

5. Incorporate Regular Training and Development

We’re seeing the world changing – in just a few years, we’ve experienced a global pandemic, the emergence of AI, and major political shifts.

In this context, continuous skill enhancement at the trustee level can be the key to better governance and risk mitigation.

Here are three ways to ensure everybody on the board stays informed about new regulatory guidelines and emerging technologies:

• Focused workshops – Offer  periodic training on topics like data protection, anti-fraud measures, and financial planning. Expert-led seminars reinforce best practices and keep the board aligned with current regulations.
• Peer learning – Encourage trustees to share personal experiences and successes from their professional backgrounds. Exchanging insights stimulates new ideas and fosters a deeper sense of collective responsibility.
• Mentoring schemes – Pair newer trustees with experienced board members who can provide guidance on compliance matters, risk identification, and strategic planning.

6. Promote a Culture of Transparency and Ethics

Good governance extends beyond compliance checklists. It weaves ethics into the organisation’s culture, paving the way for sustainable community impact. You should make a goal of becoming more transparent every year by following a few simple directions:

• Open communication channels – Facilitate regular discussions between trustees, staff, and volunteers. Accessibility and honesty breed confidence in how decisions are made.
• Whistleblowing policies – Put in place a formal route for individuals to raise concerns. Encouraging staff to report potential violations without fear of repercussion demonstrates an ethical stance.
• Public reporting – Publish annual reports, financial statements, and impact assessments promptly. Demonstrating accountability fosters public goodwill.

Knowledge sharing consortia: Participating in sector-wide groups or alliances fosters the exchange of best practices, reducing trial-and-error approaches.

7. Align Strategy with Regulatory Updates

Many trustees grapple with staying aligned with fresh guidance from the Charity Commission. Nonetheless, updated regulations offer valuable insights into best practices.

For example, Charities and Risk Management (CC26) is periodically updated to reflect new challenges, from data protection rules to fiscal obligations.

You just need to create a system that can help you stay up-to-date and implement changes on time.

• Annual governance reviews – Evaluate how internal policies compare to the latest regulatory statements. Adjust processes or create new policies to meet these requirements without undue delay.
• Consult external expertise – Seek professional guidance when interpreting legislative changes or applying newly introduced frameworks. External advisers often uncover overlooked risks.
• Ongoing board engagement – Schedule dedicated governance sessions. Discuss updates from the Commission, mooted regulatory changes, and potential repercussions for the organisation.

Is Your Charity Ready to Mitigate Emerging Risks?

Strong governance hinges on precise reporting, consistent monitoring, and timely financial insights. Armed with the measures discussed, is your board ready to take the next step?

Charity Accounting Partners offers trustee-focused support by delivering clear management accounts, detailed forecasts, and robust risk assessments.

Through these tailored services, boards can cultivate transparency and keep a firm handle on compliance, ensuring that your organisation steers safely through turbulent waters.

Do you need our help? Get in touch!