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I'll recharacterize a bit of what James said.
It's true, people won't like it if you tell them "no" every time they want to do something. Your biggest legal risk is probably the risk of getting sued in civil court because something went wrong at a formal colony/chapter function and someone got hurt. The second biggest legal risk is probably the same thing for informal colony/chapter functions.
I'm not saying "never do anything that might involve some kind of risk." You'd end up not doing anything. What risk management entails is coming up with ways to make the risks small -- taking the reasonable steps to minimize the risks you can foresee.
For example, there's a conversation around here somewhere that has some posts about fraternity parties and security. If a fraternity is going to have a party -- even a dry party -- it needs to have some people at all times who are monitoring security. For my chapter that meant at least six people -- three people monitoring doors (only one of which was open for entry) and three more moving around the party. Risk management can mean making sure the stairs in a house are properly cleaned and that any rugs or carpeting in a meeting room aren't going to trip people. It doesn't necessarily mean harsh and restrictive rules. But like I said, you'll have less need for restrictive rules if people are really watching out for each other and for themselves.
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