Count Shared Exposures, Not Just Awards
A grant portfolio can contain several awards and still depend on one supplier, place, payment channel or implementing network. Concentration describes how much of a defined portfolio is exposed to a category. Correlated risk concerns losses or disruption that can occur together because awards share an underlying driver.
An award count alone cannot establish diversification. This explanation concerns program-grant planning, not investment advice or a universal funding cap. Start with funding scope and amount for the actual authorized purpose and resources.
Map a Fictional Portfolio
The invented portfolio has four awards totaling 100,000 currency units. Amounts are approved grant amounts for one stated period, not expected losses or verified expenditure.
| Award | Amount | Place | Crucial Shared Dependency |
|---|---|---|---|
| North outreach | 30,000 | District North | Supplier Cedar; Road Bridge |
| North training | 25,000 | District North | Supplier Cedar; Road Bridge |
| South access | 25,000 | District South | Supplier Elm; Road Bridge |
| West support | 20,000 | District West | Supplier Fir; different road |
| Total | 100,000 |
North accounts for 55,000, or 55% of approved amounts. Cedar serves 55,000, also 55%. Road Bridge supports 80,000, or 80%. These are overlapping exposure views. Adding 55% + 55% + 80% would double-count awards and produce a meaningless combined proportion.
Test Scenarios Without Pretending to Predict Loss
If Cedar cannot supply, two awards have a shared vulnerability totaling 55,000 of approved scope. That does not mean 55,000 is lost: substitutes, timing, existing stock and work already completed matter. If Road Bridge closes, three awards share potential interruption even though they use different suppliers and operate in two districts.
The West award provides a different route exposure, but its 20,000 amount does not prove the entire portfolio is resilient. It might share an unexamined payment system or intermediary with the others. A fuller map asks about delivery partners, timing, currency, fund restrictions, safety and the staff or systems on which decisions depend.
Compare Responses Against Their Own Constraints
The fictional committee considers an alternative supply route, staggered delivery and a verified substitute supplier. Each needs evidence of feasibility, quality, authority and cost. Adding a fifth award that uses Road Bridge would increase the award count without removing the dependency.
A universal percentage cap could obscure the real purpose and risk tradeoff. A concentrated response may be justified by a defined emergency or scarce specialist capacity; it still needs explicit risk ownership, realistic fallbacks and approval under applicable rules. Conversely, spreading small awards can add administration while leaving shared dependencies unchanged.
The useful output is a conditional scenario note: "A bridge closure could disrupt three awards; their approved value is exposure context, not a loss estimate. Verify alternative routes and supply options before revising delivery promises. Review the map when suppliers, access or award amounts change." Do not infer a probability, financial reserve or investment allocation from this exercise.
For pooled arrangements, see governance across models. Pooling contributions does not automatically eliminate shared implementation risks.
Sources and Limits
MPTF Office's Quality Features, section 7, gives a UN inter-agency risk-management context. UK grants risk/control guidance, September 15, 2026, Risk and Assurance, is specific government-grant background, not an NGO-wide regulation. Consulted October 29, 2026. The exposure categories, amounts, calculations and scenarios are original fiction, not observed risk estimates or recommended portfolio limits.