Ann Shanklin: Risk Management Basics


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Risk management is not some mystery. This session will provide simple frameworks for organizing and implementing basic risk management practices in a nonprofit organization; share the most common risks facing nonprofits based on 20+ years of claims history; and look at some specific areas of risk and what you can and should be doing to minimize your exposure.

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Ann Shanklin: Risk Management Basics

  1. 1. Risk Management BasicsJune12, 2013Presented by: Ann ShanklinDirector of Loss ControlNonprofits Insurance Alliance Group
  2. 2. Agenda Review• What is Risk• What is Risk Management• A Risk Culture• Developing a Risk Management Program• Examples of Risk by Type• Summary
  3. 3. “future uncertainty” “a choice, rather than a fate”“the possibility of an outcome different than the one expected”
  4. 4. What is Risk Management?• A discipline for dealing with uncertainty• A system for making good choices• A framework for understanding liability• A model to respond to undesirable events
  5. 5. Why We Manage Risk• To safeguard resources from surprising losses• To be prepared to seize surprising opportunities• To limit uncertainty
  6. 6. How We Manage Risk• Evaluate loss exposures• Appraise feasible risk management techniques• Establish a risk management program• Adapt to change
  7. 7. Why Do We Need Risk Management?• Minimize the adverse effects of lossesthat do occur• Demonstrate due diligence• Make your nonprofit an attractive „risk‟• Meet funder/insurer minimum requirements• „Everybody‟ goes home in one piece
  8. 8. Risk in the Nonprofit Sector• Inherent in our organizations• Fundamentally different than the for-profit world– Focus principally on preventingharm to the persons servedby a nonprofit– Impact goes well beyonda financial transaction
  9. 9. REPUTATIONA reputationthat took decades to buildcan be threatened by a single event.
  10. 10. Most Common Risks• Slip, trip and fall injuries to clients, volunteers,and the public• Auto accidents• Allegations of improper oversight• Allegations of wrongful employment practices• Property: water, theft, fire
  11. 11. How often do claims occur per year?• General Liability – 1 in 50 locations• Auto Liability – 1 in 8 vehicles owned• Directors & Officers – 1 in 50 nonprofits• Social Service Professional – 1 in 50 nonprofits• Improper Sexual Conduct – 1 in 125 nonprofits
  12. 12. What does an average claim cost?• General Liability $ 12,000• Auto Liability (with injury) $ 6,000• Directors & Officers $ 28,000• Social Service Professional $ 61,500• Improper Sexual Conduct $ 78,000
  13. 13. RiskManagementLossControlSafety
  14. 14. A Risk Culture• Risk management is most effectivewhen …It becomes part of the organization‟s culture Intuitive Habitual
  15. 15. A Risk CultureIt is a shared responsibility Employees Management Board of Directors Professional Advisors[continued]
  16. 16. “Risk is like fire: If controlled it will helpyou; if uncontrolled it will rise up anddestroy you.”~ Theodore Roosevelt
  17. 17. Individual Collective
  18. 18. Risk Management Mindset• Think about risk and risk management in asimple and memorable way
  19. 19. Risk management is what you doto prepare for the unexpected.Simply put …
  20. 20. How do you preparefor the unexpected …it’s unexpected!
  21. 21. • Things that we knowwe knowKnownKnowns• Things that we knowwe don‟t knowKnownUnknowns• Things that we do notknow we don‟t knowUnknownUnknowns
  22. 22. • Things that we knowwe knowKnownKnowns• Things that we knowwe don‟t knowKnownUnknowns• Things that we do notknow we don‟t knowUnknownUnknowns
  23. 23. • Things that we knowwe knowKnownKnowns• Things that we knowwe don‟t knowKnownUnknowns• Things that we do notknow we don‟t knowUnknownUnknowns
  24. 24. Communicate• Why are we doing thisA safer working environment for all• No project, deliverable or objective is risk-free• Managing risk is more cost effective than fixingproblems• Planning for risk allows you to respond earlierand more effectively
  25. 25. Educate• Keep it simple• Managing risk is more cost effective than fixingproblems• Planning for risk allows you to respond earlierand more effectively• Constant, consistent messagesPart of daily responsibilities
  26. 26. Key Questions• What could go wrong?• What will we do to prevent these things fromgoing wrong?• What will we do if something does gowrong?• How will we pay for it?
  27. 27. Reward andRecognition
  28. 28. Reward & Recognition• Align reward and disciplinary systemwith the culture you want to create• “Doing the right thing” wins over “doingwhatever it takes”• Communicate successes• Recognize good risk reduction ideas
  29. 29. Implement• Keep it simple• Communicate• Strive for feedback … not perfection• Be mindful of the gap
  30. 30.  What gets measured getsdone We do it because we havewant to Safety is a priority value True safety culturetransfers to off the job
  31. 31. Developing a ProgramCritical Steps1. Establish purpose of the program2. Assign responsibility for the plan3. Acknowledge and identify risk4. Evaluate and prioritize risk5. Develop a written plan6. Implement your plan7. Review and revise the plan as needed
  32. 32. Examples of Risk by Type
  33. 33. Employment & Personnel• Hiring PracticesApplicationsBackground Checks• Written Position Descriptions• HandbookRequired PoliciesEssential Policies• Training
  34. 34. Employment & Personnel• Personnel practices should be grounded inlegal, defensible practices• Remember compliance; but don‟t assumeyou‟ve got it rightGood intentions aren‟t good enough Classifying workers as “exempt” because you can‟t affordovertime pay Classifying workers as independent contractors to reduceemployment expenses[continued]
  35. 35. Facilities Management• OwnInspections, Maintenance and Repair Use Checklists Regularly Scheduled Contractors (contracts and expectations)• RentLease Clearly establishes duties & responsibilities for bothlandlord and tenant
  36. 36. Facilities Management• Breakrooms; Kitchens• Playground• Visitors• SafetyEmergency PlansCrime Prevention[continued]
  37. 37. Managing Your Data• Employee Use of Equipment/SystemsTechnology Use Policy Appropriate use of email and the internet E-mail is the property of the nonprofit E-mail and computer media issubject to search at any time,passwords notwithstanding
  38. 38. Managing Your Data• Client Privacy• System Security• Safeguarding Your Website[continued]
  39. 39. Managing Your Data• Documentation Guidelines• Records RetentionPolicySchedule• Storage• Archiving and Recordkeeping• Destruction• Annual Review[continued]
  40. 40. Client Transportation• Owned VehiclesInsuranceFleet Safety• Personal AutoInsuranceUse Policy
  41. 41. Client Transportation• Field TripsWaivers• Emergency Procedures[continued]
  42. 42. Client Activities• Code of Conduct• Informed Consent;Waiver and Release forms• Facility/Venue Management• First Aid/Injuries
  43. 43. Client Activities• AthleticsAppropriate protective equipmentSafe playing conditionsSafety rulesTrained adult supervision[continued]
  44. 44. Volunteers• SelectionDevelop a position descriptionUse an applicationBe selectiveUse interviews• Handbook• Supervision
  45. 45. Partnership Risks• Written documentationMemorandum of Understanding
  46. 46. CultureProcessesPeople
  47. 47. Risk Management• Doesn‟t have to be overly complicated• About simple principles and habitual practices• Running your organization as best you can soyou may fulfill your mission to the fullest in anuncertain future• Good risk management = good management
  48. 48. Thank you for your participation!Ann ShanklinDirector of Loss ControlNonprofits Insurance Alliance Groupashanklin@insurancefornonprofits.org831-621-6076