Risk Management Strategies in NGO and Commercial Sector Compared Research Paper

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Corporate Governance and Risk Management

The charity and commercial sectors offer different notions concerning risk management in the corporate arena. Currently, the charity sector is facing various difficulties including a reduction in the funding amount and the need to adopt the use of the ever-changing technology. Besides, the communication means is dynamic hence creating emptiness in service provision. However, it embraces new ideas and innovation that prepare the corporate field for the future. Risk management is the process of ensuring that the occurrence of various risks or activities does not cause any financial loss to the entity (Merna, and Al-Thani, 2011). This differs to corporate governance, which refers to the identification and clarification of activities and responsibilities undertaken by various individuals in an organization (Brikend, 2014). The commercial sector offers direct and proportional risk management proposals where the corporate management pays some money for it to be covered against the occurrence of a risk. The following study identified the differences between the third and commercial sectors in relation to the risk management protocols and corporate governance.

The difference between the two sectors is significant and cannot be ignored. Mostly, after the occurrence of any insured risk, the commercial sector is faster and efficient at responding. Since an individual paid all the premiums for the risk, he or she is entitled to the compensation. In the charity sector, the organization decides whether to compensate the individual or not. In this case, it does not depend on the fact that the risk was genuine or not. However, it is essential to identify that the third or charity sector might be better positioned to handle the needs of the weak and provide services in remote areas in a better way compared to the commercial sector (Krishna, Stuart, and Fitriya, 2013).

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In order to differentiate the commercial and charity sector in relation to risk management, it is important to identify the goals between the two sectors. In this case, the primary objective of a commercial sector is to make a profit out of the premiums paid by the insured. However, the third sector aims at restoring the financial position of the investor without having to pay any amount of premium. The needs of the societal members are the priority of the charity organization (Tao and Hutchinson, 2013).

The third or charity sector aims at identifying the needs of the people without any form of discrimination. In such cases, the organizations aim at ensuring that all threats posed to the environment are addressed. The organizations' objectives ensure a maximum productive capacity among different groups including the landless and disabled. On the commercial sector, the compensation or view of the risk management process depends on the innocence of the client. In this case, if the client were in….....

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