What about other types of risk?

So far, this blog has covered three overarching types of risk: financial, operational and reputational. These three are by-far the most predominant in a church's everyday business, and need the most focus. There are, however, other types of risk that could arise, but for the most part are not going to be a huge hazard to a house of worship.

For most companies and corporations, which make money from selling goods or services, market risk is important to pay attention to. This is the risk that fluctuation in prices and costs can have an effect on the overall bottom line. For example, commodity prices could rise, causing greater expenses to the organization, or interest rates could go up, resulting in a greater cost of debt. There's also currency risk, which happens when a multinational company deals with money from different countries, and equity risk, where stock and security prices constantly fluctuate. Going even deeper, some organizations pay a lot of attention to volatility risk, which is focused on primarily with derivatives trading, and are also focused on systemic risk, another securities-related term which describes risk that is impossible to mitigate.

So what should churches think of these risks? Ultimately, probably not too much, because there isn't a whole lot that can be done about them from an individual congregation's perspective. Take market risk: it's unlikely to cause too much trouble, because churches typically won't have their budgets wiped out by a few rising prices. Interest rate risk also exists for a church that's carrying debt, but not to the extent that it would affect a multi-billion dollar corporation. And equity and currency risk may affect pensions, but most denominations keep a pension plan that is well outside the decision power of each congregation.

When discussing risk, it's important to have scope. Financial, operational and reputation risk are all important to a church, and more importantly, are manageable from the congregational level. The fluctuation of commodities and stock markets are most-definitely not. Knowing all the risks the church faces is immensely valuable, but even more so is knowing where, and where not, to focus the attention.