Risk Management in Social Enterprises

Risk Management in Social Enterprises

Every social business should have a process that provides it with a systematic view of the risks it faces over the course of its activities.

As part of this process, establish all relevant risk registers to identify the risks that the organisation faces, grading them in terms of likelihood of occurrence and seriousness of impact. Then, create plans for managing each risk. 

The purpose of a risk register 

The purpose of having a risk register is to ensure levels of risk and uncertainty are properly managed so that the organisation can achieve its objectives. 

Below are outlines of the process by which the Wales Co-operative Centre’s risk registers are established, maintained and reviewed.

 

Key elements of a risk register

• Risk  is taken to mean the chance that an event will occur that will impact on the Centre’s objectives. It is measured in terms of impact and likelihood. 
• Risk Assessment  is taken to mean the process used to determine risk management priorities by evaluating and comparing the level of risk against predetermined acceptable levels of risk.  
• Risk Management  is taken to mean the systematic application of a management system (policies, procedures and guidelines) to the task of identifying, analysing, treating and monitoring risk.  
• Risk Register  is taken to mean a register which records details of all the risks identified for an organisation or programme, their grading in terms of likelihood of occurring and seriousness of impact on the organisation, initial plans for managing each high level risk and subsequent results.
• Impact  (also known as consequence) is taken to mean the outcome of an event expressed as a loss, injury, disadvantage or gain.
• Likelihood  is taken to mean a qualitative description of probability or frequency. 
• Control  is taken to mean that portion of risk management that involves the implementation of actions to eliminate or minimise adverse risks. 

Risk management responsibilities

• The Management Board oversees risk management at the Wales Co-operative Centre. It is supported in this role by the Audit and Risk Committee which scrutinises and advises the Board on matters relating to risk management. 
• The Chief Executive Officer is required to ensure that a corporate risk register, as well as programme, project and function risk registers are established, implemented and maintained. Directors are required to develop risk registers for the functions that they manage e.g. HR, IT and finance.  
• Programme Directors are required to develop risk registers for the programmes which they lead. Managers are required to develop risk registers for the projects which they lead. 

How to create a risk register

• There will be a corporate risk register as well as programme, project and function risk registers at the Centre. These will be developed using the Centre’s standard risk template. The risk register assesses the likelihood and impact of each risk.
• The risk register methodology includes the date the risk was identified, a description of the risk and clearly defined impact, as well as likelihood and impact scores, risk score and class. You should also outline the control measures, target risk score and target date, risk owner and dependencies.
• A copy of the corporate risk register will be distributed to the Board, SMT and managers. Programme registers will be shared with SMT and managers. Project and function risk registers will be shared with the relevant managers and programme directors.
• Matters are that not deemed to be a risk but need to be considered and kept under review should be recorded in an issues log. 

How to maintain a risk register

• The corporate risk register will be reviewed by the SMT on a monthly basis and it will go to the Management Board to be reviewed at each meeting. 
• Each programme risk register will be reviewed by the relevant Programme Director and managers on a monthly basis. Programme risk registers will then be reviewed by SMT on a 6 monthly basis as well as by any relevant Programme Management Board, such as the Social Business Wales Management Board. The Board will review programme risks at each meeting as part of the progress report.
• Project and function risk registers should be reviewed at team meetings on a monthly basis and be part of the agenda of meetings with managers. 
• The Audit and Risk Committee will review the content of all Wales Co-operative Centre risk registers, as well as the related processes for managing risk, as often as it chooses but on at least an annual basis. 
• SMT members and managers are required to ensure they report any new risks, or changes to existing risks as soon as they are aware of them for incorporation into the relevant risk register. Corporate risks should be reported to the Chief Executive, programme risks should be reported to the relevant Programme Director and project or function risks should be reported to the relevant Director or Manager. 
• Any risk deemed to be a very high risk (or a red risk) on a programme, project or function risk register will automatically be escalated for inclusion in the corporate risk register. Such a risk will remain on the corporate risk register until such time as the risk is deemed to have been reduced to have been reduced to high risk. 

 

Marketing Management for Social Ventures

Marketing Management for Social Ventures

Social enterprises face unique challenges with regards to marketing.  A social entrepreneur creates a business to fill a gap in the market and serve a neglected community. For this reason, tools for market research for ethical/impact products are underdeveloped.

When defining your audience for social enterprises you have to both define your customer and the community you impact – a traditional company only needs to understand their customer. Both the revenue model and impact model are key to success.

 

Additionally, as you are addressing a major societal or environmental problem, expertise and authority in your space is even more important than in traditional business models. An organization might look for certification, for example, from the Fair Trade Certified mark or officially marked as organic, to increase the value of their item and convey their commitment to the end purchaser.

 

Keeping these differences in mind, your social enterprise marketing strategy should incorporate your impact at every step of the way. In our next marketing post, we’ll talk about the specifics of developing your organization’s brand and voice and how this can be integrated into your visuals, content and every customer-facing asset. In the mean time, check out the following overarching marketing plan via Social Enterprise:

 

Strategy:  The vision and purpose of the organization will provide the long-term strategic direction of the marketing plan. As a social enterprise, one of your core values will be to reinvest profits into your stated cause or community.

 

Communications Objectives:  SMART (Specific, Measurable, Achievable, Realistic, Time-bound) objectives for marketing should lead the action planning. Communications objectives work to manage the buying cycle, abbreviated as AIDA (Attention, Interest, Desire, Action), and different media are used throughout the buying cycle to stimulate demand. In addition, objectives should consider company image and branding.

 

Communications Tactics:  Depending on the stage of the product in the product life cycle, the campaign objectives, the customer profile and the market positioning determines which media are used. A campaign integrating multiple media avenues is strongest, and ensures that the marketing messages are reinforced.

 

Action Planning and Implementation:  Resources, budgets and time frames are confirmed, and test marketing may be undertaken.

 

Evaluation and Control:  Controls are essential in measuring the results of the campaign compared to expectations. This will also help with planning further marketing campaigns.

Social Sustainability

What is Social Sustainability?

Social sustainability is an often overlooked aspect of sustainability, as sustainable development discussions often focus on the environmental or economic aspects of sustainability. All three dimensions of sustainability must be addressed to attain the most sustainable outcome possible.

• Social sustainability occurs when the formal and informal processes; systems; structures; and relationships actively support the capacity of current and future generations to create healthy and livable communities. Socially sustainable communities are equitable, diverse, connected and democratic and provide a good quality of life. WACOSS, Western Australia Council of Social Services
• Social sustainability is a process for creating sustainable successful places that promote wellbeing, by understanding what people need from the places they live and work. Social sustainability combines design of the physical realm with design of the social world – infrastructure to support social and cultural life, social amenities, systems for citizen engagement, and space for people and places to evolve. Social Life, a UK based social enterprise specializing in place based innovation
• The ability of a community to develop processes and structures which not only meet the needs of its current members but also support the ability of future generations to maintain a healthy community. Business Dictionary

Social Sustainability in Business

From a business perspective, social sustainability is about understanding the impacts of corporations on people and society. In the triple bottom line (TBL) model, social sustainability is the least quantifiable part of sustainability. The TBL is an accounting framework of three parts: social, environmental and financial. The TBL framework has been adopted by organizations to evaluate performance. The three aspects interrelate to determine a corporation’s performance.

In corporations, social sustainability performance issues include human rights, fair labor practices, living conditions, health, safety, wellness, diversity, equity, work-life balance, empowerment, community engagement, philanthropy, volunteerism, and more. Though social impact, or social sustainability, issues are not easily quantifiable or measurable, they are easier to identify.

 

Adrian Henriques, Professor of Accountability and CSR at Middlesex University and author of ‘Corporate Impact – Measuring and Managing your Social Footprint,’ states, “Social impact includes anything that affects company-stakeholder relationships: from how much and how reliably suppliers are paid, to how a product affects lives. From how small shareholders may be treated to the impact of alcohol on health and communities.”

 

Social sustainability mitigates risk. Poor social sustainability is a risk to both brand and product quality. Outsourcing to manufacturing sites with unsafe or poor working conditions can hurt a global corporation’s brand if a disaster happened or if word were to reach media and consumers. Similarly, ignoring safety measures to protect public health can cost food manufacturers millions of dollars through government-backed recalls of products from market shelves.

Providing safer working conditions, living wages and job security creates a more secure supply chain.

 

Consumers want socially sustainable products. Consumers are more informed and engaged. They care about the impact (environmental or social) of the products they buy. Companies who are more transparent about their supply chains have reaped the benefits from consumers who are willing to spend more for products that are more ethical.

 

Social sustainability is attainable. Companies are now partnering with social sustainability organizations to become more transparent, make their operations or supply chains more ethical, and understand the human cost of business.

SOCIAL INNOVATION AND ENTREPRENEURSHIP

SOCIAL INNOVATION AND ENTREPRENEURSHIP 

Social entrepreneurship involves creating new products or services to address social or environmental needs. The products and/or services are made available through existing market structures. These are enterprises with a social betterment goal that are structured to make a profit. This business model creates shared value, meaning that the organization simultaneously generates financial benefits and environmental and/or social benefits.

 

Social innovation is about creating new social structures that allow issues of justice, education, environmental protection, sustainability and/or community development to be reframed so that new solutions can come forward. Social innovators question the premises on which existing social structures are built and then reimagine systems and institutional relationships to bring about change. The distinction between social entrepreneurship and social innovation is fluid, and there is often overlap between the two changemaking approaches.

 

Social innovation and social entrepreneurship may work through a variety of organizational architectures to enable change. We can think about organizations as being on a spectrum: At one end of the spectrum are not-for-profit entities that fill vital social and environmental needs through traditional charitable approaches, relying on donations as their primary source of funding. At the other end of the spectrum are for-profit businesses that fill customer needs through market-based mechanisms: selling the product or service for what the market will bear. Many for-profit companies incorporate sustainability and socially responsible practices into their operations and culture, but they are still primarily focused on the financial bottom line. In between these two ends of the spectrum are a range of organizational architectures that innovatively address social and environmental needs by developing new products and services and/or through creative structures for the delivery of these products and services. This space between traditional not-for-profit and traditional for-profit organizations encompasses social innovators and social entrepreneurs. 

Opportunities and Successful Models

9 Business Model Examples For Social Enterprises

A business model is a structure, design or framework that a business follows to bring value to its customers and clients. However, there are at least three measures of the success of a business model—its ability to generate profit for its owners, its ability to generate positive change in the world, and its ability to achieve a balance of profit and positive change. The first approach applies to traditional for-profit companies; the second approach applies to traditional charities; and the third approach (a balance between profit and positive change) applies to social enterprises.

 

Given the definition above, a social business model is a structure, design or framework that a social business follows in order to bring about a positive change while maintaining healthy financial returns. Yet despite sharing this basic framework, social entrepreneurs have a wide spectrum of viable social business models to choose from.

To help shed light on that spectrum, in 2012 Wolfgang Grassi (aka W. Grassi) identified nine types of social business models. He began his analysis with three factors guiding any social business: the mission, the type of integration, and the target population. He then explored the way in which these three factors intersected with the three traditional categories of business (for-profit, not-for-profit and hybrids) to generate the nine specific types of social business models that any social enterprise could adopt.

Let’s have a look at them:

1. The Entrepreneur Support Model

This model of social enterprise (SE) sells business support services directly to the entrepreneurs in its target population. In other words, this type of SE helps entrepreneurs get their businesses off the ground. Support can come in the form of consulting services, training, microfinancing or technical support. Organizations that belong to this category may include economic development organizations, business development service organizations and microfinancers

 

2. The Market Intermediary Model

This type of SE generally helps their clients by marketing or selling their clients’ products or services for them. For example, an organization that helps struggling small farmers by marketing and to sell their crops for them would belong to this category.

Want to dig in right now and figure out your impact model? We love this book: Business Model Generation: A Handbook for Visionaries, Game Changers, and Challengers which is a great tool, resource and guide to get you started! 

 

3. The Employment Model

This type of SE provides their clients with job opportunities and job training. Revenue generated by those jobs pays for the SEs expenses and flows back into the services provided for those in need. Many youth and disabilities organizations adopt this model.

 

4. The Fee-for-Service Model

The fee-for-service model is one of the most commonly adopted SE business models. The SE charges the customer directly for the socially beneficial services it provides. Many hospitals, schools, museums and membership organizations use the fee-for-service model to a greater or less degree.

 

5. The Low-income Client Model

SEs in this category generally offer social services directly (as in the fee-for-service model) while focusing on low-income clients. Hospitals and healthcare programs that offer their healthcare services to low-income patients often adopt this model.

 

6. The Cooperative Model

This is one of the most widely recognized categories of SE. The cooperative is generally a fee-based membership organization that provides member services to a group that shares a common need or goal. The cooperative is owned and operated by its members, who both run the cooperative and receive the benefits of its success. Two of the most well-known types of cooperative include credit unions and employee-owned businesses (“co-ops”).

 

7. The Market Linkage Model

SEs that serve as brokers for their clients often adopt this model. These SEs focus on building relationships and otherwise connecting their clients with markets for their clients’ products and services. However, unlike SEs adopting the market intermediary model, these SEs generally do not market or sell their clients’ products and services for them. Many trade associations adopt the market linkage model.

 

8. The Service Subsidization Model

This type of SE funds social programs by selling products or services in the marketplace. Service subsidization is one of the most common SE models, as almost any SE can adopt it. In contrast to organizational support SEs (see below), service subsidization SEs integrate their internal business with external social programs. For example, a law firm may use the revenue generated from the firm’s regular law practice to fund a social program that provides free law services to those in need. The firm may run the program out of their own offices and may provide the free law services themselves.

 

9. The Organizational Support Model

This type of SE, like a service subsidization organization, sells products or services to fund social programs. However, the social programs they fund are part of a separate, parent organization. In other words, an organizational support SE raises funds for a parent non-profit that, in turn, runs the social programs the SE wishes to support.

Although most social enterprises may fall naturally into one of W. Grassi’s nine categories above, there is always room for new and combined models to emerge. If your social enterprise cannot achieve its goals through one of these business models, you may choose to explore entirely new ones.

Social Entrepreneurship Opportunity

Social Entrepreneurship Opportunity

Typically, opportunities in social entrepreneurship are based on the need to create social value which benefits the local community. A social enterprise usually does this by solving a problem or providing assistance in an area of need or disadvantage.

 

Therefore, creating social value and not wealth is the main driver for social entrepreneurs. Additionally, they need to achieve financial stability to maintain value. Here is a quick glimpse at the market niches which have many social enterprises:

• Social enterprises which serve the financially poor population. In these markets, the profit margins are very low and the risks are high. Further, in certain sectors like microfinance, there is a constant debate as to whether a commercial operation can fulfil the needs of the poorest client groups more effectively than modified NGO models. In this niche, some examples of social entrepreneurship organizations are micro-clinics in low-income zones, affordable irrigation tools to poor farmers, etc.
• New and challenging markets where the entrepreneur is required to incur heavy expenses to stimulate demand and create opportunities. This is due to the prevalent stigma and the challenges faced in acclimatizing people to newer and more complex technologies as well as challenging perceptions about certain services which need to be provided by the state. Some examples are offering counselling services to people living with HIV/AIDS or other socially marginalized groups, microinsurance products for farmers, etc.
• Markets for products which offer environmental benefits but are not fully commercially competitive. Many environment-friendly business lines are completely commercially viable. However, there are many others which are suitable for hybrid social entrepreneurship.

Perspective of Social Entrepreneurship

The Perspective of Social Entrepreneurship in India

Social entrepreneurs are characterized by the following key attributes:

Economic history is witness that ‘social entrepreneurship’ is a new term, but old concept. Yes, it has gained renewed currency in a world characterized by a growing divide between the haves and have-not’s. Given this heightened visibility, individuals have come forward to help the down-trodden and have-not’s of the society.

 

These are solution-minded pragmatists who are not afraid to tackle any big problem for the cause of poor people in the society. They have uncanny knack to recognize the tremendous potential the billions of poor people possess.

 

They are absolutely committed to helping them use their talents and abilities to harness their potential for their improvement and upliftment. For doing so, they use inspiration, creativity, courage, fortitude and, most importantly, direct action, to create a new happening and reality that results in enduring social benefits and a better future for society.

 

These individuals, or say, social entrepreneurs introduce solutions to seemingly intractable social problems for improving the lives of countless marginalized, disadvantaged and disenfranchised people who are weak and poor in financial means and political clouts.

 

Just as entrepreneurs change the face of business, social entrepreneurs act as the change agents for society. They seize opportunities which others miss and improve the existing equilibriums. They do so by inventing new approaches and creating sustainable solutions to change society for the better from status quo.

However, unlike business entrepreneurs who are generally motivated by profit earnings, social entrepreneurs are motivated to improve the social wellbeing. Nonetheless, social entrepreneurs are just as innovative and change oriented as their business counterparts, searching for new and better ways to solve the problems that plague the society.

 

Social entrepreneurs are characterized by the following key attributes:

(a) Ambitious:

Having high ambition is one of the major characteristics of the social entrepreneurs. They are the reformers and revolutionaries with a social mission. They are the ambitious people tackling major social issues and offering new ideas and solutions for wide-scale change.

Such entrepreneurs are found in all walks of life and all kinds of organizations: innovative non­profits, social purpose ventures such as for-profit community development banks, and hybrid organizations that mix elements of non-profit and for- profit organizations.

 

(b) Missionaries:

The life-histories of successful social entrepreneurs reveal that their mission, i.e. the ultimate purpose is not creating just wealth, but most importantly, generating as much as possible social value. Yes, wealth creation may be the part of effort, but is not an end in itself.

 

As a matter of fact, promoting systematic social change and creating desired impact is the real and ultimate purpose of social entrepreneurs. It is this mission that gives them strength, fortitude, and courage to tackle with major social issues seemingly intractable social problems.

Here the views of Bill Draton, CEO and founder of Ashoka, a global non-profit organization seem worth quoting. “Social entrepreneurs are not content just to give a fish or teach how to fish. They will not rest until they have revolutionized the fishing industry.”

 

(c) Strategic:

Like the successful business entrepreneurs, social entrepreneurs also search and identify the major social issues what others miss. They use these as opportunities to improve the existing social systems, create solutions, and invent new approaches that create social value.

 

(d) Resourceful:

Social entrepreneurs function in a social framework, not within the business world. As such, they have limited resources because of their limited access to capital and traditional market support systems. Given such conditions, they need to be skilled enough to muster and mobilize human, financial, and political resources required to solve the social problems.

 

(e) Result Oriented:

Ultimately, social entrepreneurs are driven to produce measurable results to make perceptible dent on the society. These results change even transform the existing equilibriums, realities, and create new pathways for the benefits of the disadvantaged and downtrodden people of the society. They have the skill to unlock and harness the potential society has to effect social change.

Social Entrepreneurship

What is Social Entrepreneurship?

Social entrepreneurship is, at its most basic level, doing business for a social cause. It might also be referred to as altruistic entrepreneurship.

Social entrepreneurs combine commerce and social issues in a way that improves the lives of people connected to the cause. They don’t measure their success in terms of profit alone – success to social entrepreneurs means that they have improved the world, however they define that.

Beyond that, however, there are differing opinions about what constitutes social entrepreneurship. Some believe the definition applies only to businesses that make money and work toward improving a designated problem by selling something to consumers. Others say business owners who work to solve a social problem using grant or government money are also social entrepreneurs.

In the “earned income” model – where the social entrepreneur makes money by selling something – the company’s customers know that their purchase will help support a stated cause, whether it’s providing soap to children in need so hand washing can protect them from diseases or selling whistles to help promote peace in the Congo.

People are often attracted to businesses that use a social entrepreneurship model because they’re helping to solve a social problem when they spend money on something they need or want.

 

Social Entrepreneurship Examples

Some contemporary well-known and lesser-known social entrepreneurs include:

1. TOMS: When the company was founded, it applied its “one for one” concept to shoes. For every pair of TOMS shoes purchased, the company donated a pair to a needy child. The company has since expanded the one for one concept to eye wear, coffee, and tote bags.
2. Grameen Bank: Founder Muhammad Yunus provides micro-loans to those in need to help them develop financial self-sufficiency. Yunus received a Nobel Prize for his work in 2006.
3. Badala.org: Founded by Joelle McNamara while she was still in high school, Badala.org is an e-commerce site that creates jobs for African women by selling the products they make. Products range from jewelry to wooden kitchen utensils.

 

Characteristics

According to the Schwab Foundation for Social Entrepreneurship, social entrepreneurs share several characteristics. They:

• Achieve large scale social change.
• Focus on the social or ecological change they want to make while earning money to support the change.
• Innovate when looking for a solution to a social problem.
• Use feedback to adapt and refine.