Some of society’s most important work is performed by non-profit organizations, which is why it’s critical that these organizations take proactive steps to reduce the likelihood or severity of risks that can threaten their mission. Non-profits need to understand their exposures and take thoughtful planned steps to mitigate risks. When non-profits don’t have a plan in place or have a gap in their insurance coverage, they open themselves up to unplanned financial burden that can prevent them from fulfilling their mission. Successful non-profit leaders know that they need to focus on addressing risks as a key step in fulfilling their mission.

For non-profits, reputation is everything. Therefore, it makes sense then that a non-profit leader should focus on dangers that could negatively impact the organization’s reputation. When good risk management practices are executed, a non-profit appears credible and stable in the eyes of stakeholders, making the experience of raising capital simpler.

If you’re looking for ways to become a risk-savvy non-profit, consider taking the following steps toward a nonprofit risk assessment plan:

STEP 1: IDENTIFY LOSS EXPOSURES

Identifying risks and exposures is where it all starts. There are hundreds of exposures inherent in any business, including but not limited to property, business interruption, auto, personal injury and cyber losses. Some of them can be transferred through a well-thought-out insurance program.  Others can be better addressed through operational changes.

STEP 2: DESIGN PROGRAM

After a non-profit identifies potential areas for loss, they should work with their broker to design insurance coverages and implement programs that avoid or reduce risks. This may include a safety and wellness program, a crisis or contingency plan, tight contractual requirements and well-thought-out hiring practices.
Designing and purchasing General Liability, Workers’ Compensation and other types of insurance should be considered during this step. The right broker will work closely with the non-profit to determine whether they should consider higher deductibles, self-insurance or captive alternatives. They can help them strike the right balance between how much insurance the organization can afford and how much risk the non-profit can assume on its own.

STEP 3: IMPLEMENT PROGRAM

Good intentions and plans are not enough. The hard part is putting this all to work. Organizations need to review responsibilities and priorities and consider the impact new processes have at the highest and lowest levels of the organization. The non-profit should ask: What specific steps need to get done? When? By whom? What measurements will tell that our plan is having an impact? Senior management should make sure that someone in the organization clearly owns this process and that its importance is understood.

STEP 4: REVIEW, EVALUATE AND UPDATE PROGRAM

A non-profit’s reason for existing is to fulfill its mission, but it won’t stay around long enough to do that without taking a page from the for-profit world. Unfortunately, many non-profits attempt to manage exposures without measurements and reviews. While metrics will vary by operations, a routine quarterly review of claim activity and key performance data is critical to a risk management program’s success.

Robert J. Scullin, ARM

Vice President-Sales Manager

bscullin@grahamco.com

The Graham Building
Philadelphia, PA, 19102

215-701-5345