Non-profits and the value of risk management

The use of risk management in non-profits is really about the use of incentives to minimize  the risk of loss as much as it is to increase the output potential for  non-profits. Fama and  Jensen (1983) discuss various types of non-profits, showing how agency problems are  mitigated by a separation of management from control. In particular, while non-profits do not  have residual claimants, as a traditional corporation might have, they do have monitors who  oversee the actions of the managers.

Chapter 11 in particular focuses on risk management.

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