Resources

Risk Assessment

A business plan should make efforts to identify potential risks in the project and outline measures to limit their impact. The process of assessing risk can be extremely useful in thinking through a project and ways to limit future problems. The following table outlines what can be considered to be a minimum level of precautions that should be taken to ensure the sustainability of an asset for community sports use.

Risk is assessed in the following areas:

Management risk factors


Risk factor Actions to alleviate risk
You do not have the capacity to take over and manage the asset
  • Ensure that a robust legal structure is in place (such as a registered charity or company limited by guarantee if you are going to sell services)
  • Appropriate long-term planning
  • Thorough feasibility study which looks closely at organisational capacity
  • Regular review meetings of capacity
You fail to manage the facility properly
  • Develop a thorough business plan which you review regularly
  • Allow monies for further training from, for example, ACRE, Community Matters, DTA.
  • Arrange a short-term trial run with the owner so, for example, you have the asset on a lease basis for 3 years before purchase
  • Employ a good facility manager (on a salary basis) who can oversee all the day-to-day running of the facility
Too few people resources to run the facility effectively
  • Don’t rely solely on volunteers but raise sufficient funding to employ adequate paid staff before taking on the facility
  • Consider taking on management of the facility in partnership with another organisation to share the responsibility
Confusion and lack of awareness over roles, responsibilities and liabilities between landlord and community sports organisation (where the asset is leasehold)
  • Landlord and community organisation write an ‘expectations document’ including their respective legal, financial and other statutory liabilities and arbitration clauses where there is disagreement
  • Where the local authority is providing funding, establish a formal service level agreement (updated annually) between the authority and the organisation to identify location of specific responsibilities, points of contact, service targets etc.

 

Fundraising and finance risk factors


Risk factor Actions to alleviate risk
You fail to raise the cash needed to purchase or refurbish the asset offered
  • Develop a refurbishment plan which means that improvements are phased into match income coming in
  • Have a range of different funding options so that, should one not bear fruit, another can be approached
  • Do not commit to anything before adequate funding has been raised
  • Develop good links with local and regional networks, local public bodies and local VCOs to ensure that you maximize local and regional links and your own credibility
  • Negotiate with the owner to make an initial investment in the facility to bring it up to a good standard and to encourage other funders
  • Go into the venture in partnership with another organisation which might carry greater fundraising weight
Costs escalate beyond your original estimates
  • Ensure all initial budgets are realistic, accurate and include adequate contingency allowance
  • Talk to other similar sports facilities about their budgeting and the costs they incurred
  • Review your budget regularly getting new quotes where necessary
  • Ensure that decisions about spending over and above the budget figures are only taken after due consideration by an agreed committee or sub-committee
  • Employ an experienced book-keeper to maintain good records of income and expenditure and alert the organisation about any problems
You are not able to fund much-needed long-terms maintenance and refurbishment
  • Develop a realistic fundraising strategy from the outset. Consider supplementing this with trading income.
  • When raising capital for the purchase of the facility, raise an extra 10% to cover the first stages of maintenance and refurbishment
  • Negotiate a leasehold transfer under which the landlord retains external and/or major repairs liabilities
You fail to raise sufficient funds to cover the running costs
  • Ideally, start the project with an agreed level of undesignated reserves to cover any periods of time in which there is a shortfall
  • Have a range of income options including different grant-makers, selling services, and advertising income for example.
  • Consider a multi-purpose facility which will attract a wider range of funders, service users and other income
  • Regularly review running costs to ensure that wastage is kept to a minimum

 

Community involvement – risk factors


Risk factor Actions to alleviate risk
Lack of interest from potential users
  • Have effective consultation with the local community and prospective users of the asset and it services from the outset to ensure that your facility will be offering what people want.
  • Utilise Sport England advice on marketing sports
  • Offer a range of different sporting activities
A vocal minority attempt to take over the organisation or the facility
  • Ensure that the governing document does not allow for undemocratic take-overs by small groups and that voting procedures are laid out clearly

Antagonism from the local community

  • Effective consultation (and listening) at the outset of the project
  • Good ongoing communication with local communities through a website, newsletter, local media etc.
  • links with local networks

 

Legal and external risk factors


Risk factor Actions to alleviate risk
You fail to comply with legal obligations leading to fines and other problems in areas such as:
  • Data protection
  • Copyright
  • Disability discrimination
  • Other equalities legislation
  • Health and safety
  • VAT
  • Employment law
  • Employee pension provision
  • Company law
  • Child Protection
  • Take advice on all legal obligations and ensure a mechanism is in place to alert you to changes and updates in the legislation
  • Attend training where appropriate
  • Maintain good records in the facility about legal obligations which can readily be passed on should there be staff changes
  • Include reference to legal obligations in management committee meetings and minutes
Competition creates a down turn in facility use
  • Develop your resource as a multi-purpose facility which appeals to a wide range of people
  • Stay informed about local developments and wider trends by being an active part in local networks and about community sports trends nationally
  • As a soon as a possible threat is suggested, make plans to alleviate its impact – don’t wait

 

5e - Risk Assessment