RISK newsletter:
The Society's Financial Status

Source: RISK newsletter, Fourth Quarter 1995, published by the Society for Risk Analysis

(Editor's Note: The following report on the Society's financial status was submitted to RISK newsletter by SRA's Executive Committee.)

Last year at this time the SRA Executive Committee prepared a summary report on the Society’s financial condition for the membership. This year we are providing an update of the Society’s financial conditions and a brief summary of the financial changes that have occurred over the last twelve months.

Last year we reported that the Society’s financial condition was “sound but open for improvement.” This year’s report is summarized as “movement in the right direction.” To help explain the recent trends in SRA’s financial status, audited data from fiscal years 1992-1994 were graphed along with budgetary estimates for fiscal year 1995, which ends December 31, 1995. The graphs present information on the major elements that make up our gross revenues and expenses, which, when combined, produce our net revenues. This information has been compiled from the treasurer’s reports for the past three fiscal years.

Three graphs are provided: one for revenues, another for expenses, and a third for net revenues. (Editor's note: Graphs not included in electronic publication.) To simplify the graphical presentation, several revenue items were combined from the detailed budget categories tracked in the SRA accounting system; e.g., dues from individual members (including subscription revenues) and sustaining sponsors were combined, and “miscellaneous” herein includes all other revenue sources not specifically identified. Similarly, expense categories were also combined: e.g., officers, councilors, and support were grouped under “Council”; and “miscellaneous” includes all other expense sources not specifically identified.

As background, each year several weeks before the Society’s annual meeting, the Society’s treasurer and executive Secretary develop a proposed budget. This budget is based on established financial commitments, historical experience, and budget requests from various sources (e.g., officers and committee chairs). The proposed budget (including expected net receipts from the annual meeting of the specified fiscal year) is then reviewed, modified when needed, and formally approved by the SRA Council at a meeting that occurs during the annual meeting. Implementation of the approved budget is accomplished by the executive secretary with close oversight from the Society’s treasurer and president.

Gross Revenues

The gross revenues of the Society were $398,818 in 1992, declined to $341,982 in 1993, rose to $399,188 in 1994, and are estimated to be $368,000 (including expected receipts of the annual meeting) in 1995. Besides these revenues, the Society received $39,121 in 1993 and $154,932 in 1994 to fund two projects, one on residential exposure assessment and the second for guidance on Monte Carlo modeling of exposure. These funds are restricted for use on these projects and have not been included in the calculation of the Society’s gross revenues, expenses, or net revenues.

The Society’s gross revenues are derived principally from the dues of individual members and sustaining sponsors, journal subscriptions, and the annual meeting. The revenues for the years 1992, 1993, 1994, and the estimated revenues for 1995 are 25%, 40%, 36% and 41% (est.) for dues; 7%, 15%, 13%, and 15% (est.) for journal subscriptions; and 54%, 40%, 47% and 39% (est.) for the annual meeting and workshops. As discussed elsewhere in this newsletter, the Society will be increasing the dues in 1996 and that will increase the relative contribution of dues. The proposed increases do not affect the 1995 dues income. The increase in revenues from journal subscriptions after 1992 reflects a change in the contractual relationship with Plenum Publishing Corporation. The revenues from workshops during calendar year 1992 were much greater than those in subsequent years, resulting in the drop in income in 1993.


The expenses of the Society were $406,537 in 1992, declined to $321,822 in 1993, rose to $362,657 in 1994, and are estimated to decline to $335,600 in 1995. The high expenses recorded in fiscal year 1992 were the result of higher costs for the annual meeting and workshops. Increased expenses in 1994 were due to the annual meeting expenses.

The primary sources of the Society’s yearly expenses consist of three parts:

Management & Operations provided by the Secretariat (i.e., Burk & Associates Inc.), which includes salaries, salary-based charges, rent, equipment, insurance, bonds, taxes, and other direct costs (e.g., committee operations, organizational support, and Society direct costs such as postage, printing, audit and legal, telephone and duplication), representing for the subject years 29%, 36%, 35%, and 40% (est.), respectively, of the Society’s total expenses. The increases in the percentage for management and operations over this period are due to the decrease in other costs to the Society and increases in the Society’s direct costs. The Secretariat’s management fee accounts for less than two-thirds of the management and operations costs and has been relatively constant for the last four years.

Publications, which includes the journal and newsletter; for the subject years, the expenses for the journal are 13%, 21%, 20%, and 21% (est.), respectively, of the total expenditures; the newsletter accounts for 10%, 14%, 12%, and 11% (est.), respectively.

Annual Meeting, expenses for the subject years were 44%, 30%, 30%, and 27% (est.), respectively, of the total expenditures.

Net Revenues

The net revenues of the Society have increased over the last three years. The net revenues (losses) of the Society were ($7,719) for 1992, $20,685 for 1993, and $36,531 for 1994. The net revenues for 1994 are significantly above those estimated in the 1994 budget ($14,800). The variation in the net revenues of the Society is largely due to changes in the net revenues for the annual meeting. This occurs because of the stable nature of the other sources of income and because membership numbers have shown only a slight increase over the past three years.

The net revenues for the annual meeting were $16,116 in 1992, $42,682 in 1993, and $62,375 in 1994. The low overall net revenues in 1992 were due to the existence of prior contractual commitments for annual meeting proceedings and the Society’s involvement in international travel programs. Those programs were completed in 1992, and no plans exist to reintroduce similar expenditures. The increase in the net revenues in 1994 was due to the larger than expected attendance at the meeting. In particular, the on-site registrations were much larger than anticipated. The estimated net revenues for the 1995 Annual Meeting are $41,000.

Since 1993, the journal expenses have been stable with net operating losses of $26,548 in 1992, $14,581 in 1993, and $18,311 in 1994. These expenses are significantly lower than earlier years due to the contract negotiated with Plenum Publishing Corporation in 1992 and to greater management control over expenses.

The newsletter expenses have been offset by advertisement revenue to a modest degree. For instance, for the subject years, the advertising revenues have averaged approximately $4,000 yearly, leading to net operating losses of $37,500, $40,900, and $40,100 respectively. In 1995, the Society entered into a new two-year contract with Tec-Com to produce the newsletter. Because of a clearer definition of relationships and responsibilities for the newsletter, we anticipate that the net cost of the newsletter will be reduced to $36,000 in 1995.


Cash reserves are those funds (in savings and investments) that remain at the end of the fiscal year after all revenues have been obtained and all bills paid. These funds are important not only to avoid difficulties with cash flow but also to provide insurance against unforeseen reversals in the financial projections of subsequent years. Most societies of our size and maturity are recommended to have cash reserves equivalent to one year’s operating budget. If SRA were to meet this criterion, it should have had $353,200 (the 1995 budget of $368,000 minus the hoped-for contribution to cash reserves of $14,800) at the end of 1994. As of the close of 1994, the Society’s cash reserves were approximately $125,000. This is an improvement over prior years but is still considerably less than what is needed to responsibly manage the Society in the future. Based on the budget for fiscal year 1995, we hope to add an additional $32,000 to that sum. With a successful annual meeting in Hawaii, we will meet our objective. However, that still leaves an uncomfortable distance from our general target of $312,000 in cash reserves.

For fiscal year 1996, the Society plans to raise net revenues in several ways. First, SRA will raise the annual dues to $85. This will result in an increase of approximately $17,000 in additional income. Second, we will again be holding a midyear workshop on risk assessment (an activity that is also consistent with the Society’s educational mission). Third, the Society is seeking to actively control its expenses. The officers have taken steps to assure that workshops at this year’s annual meeting will be on a sound financial basis. The Secretariat has also continued to control postage, printing, and other direct costs. Finally, the new contract with Tec-Com is also an important step in this process.

With these objectives in mind, the 1996 budget is presently being prepared for review, revisions, and approval at the annual meeting in December.

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