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.
1. Risk Management Basics
June12, 2013
Presented by: Ann Shanklin
Director of Loss Control
Nonprofits Insurance Alliance Group
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. “future uncertainty” “a choice, rather than a fate”
“the possibility of an outcome different than the one expected”
4.
5. 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
6. Why We Manage Risk
• To safeguard resources from surprising losses
• To be prepared to seize surprising opportunities
• To limit uncertainty
7. How We Manage Risk
• Evaluate loss exposures
• Appraise feasible risk management techniques
• Establish a risk management program
• Adapt to change
8. Why Do We Need Risk Management?
• Minimize the adverse effects of losses
that do occur
• Demonstrate due diligence
• Make your nonprofit an attractive „risk‟
• Meet funder/insurer minimum requirements
• „Everybody‟ goes home in one piece
9. Risk in the Nonprofit Sector
• Inherent in our organizations
• Fundamentally different than the for-profit world
– Focus principally on preventing
harm to the persons served
by a nonprofit
– Impact goes well beyond
a financial transaction
11. 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
12. 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
13. 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
23. Risk management is what you do
to prepare for the unexpected.
Simply put …
24. How do you prepare
for the unexpected …
it’s unexpected!
25. • Things that we know
we know
Known
Knowns
• Things that we know
we don‟t know
Known
Unknowns
• Things that we do not
know we don‟t know
Unknown
Unknowns
26. • Things that we know
we know
Known
Knowns
• Things that we know
we don‟t know
Known
Unknowns
• Things that we do not
know we don‟t know
Unknown
Unknowns
27. • Things that we know
we know
Known
Knowns
• Things that we know
we don‟t know
Known
Unknowns
• Things that we do not
know we don‟t know
Unknown
Unknowns
28.
29.
30. Communicate
• Why are we doing this
A safer working environment for all
• No project, deliverable or objective is risk-free
• Managing risk is more cost effective than fixing
problems
• Planning for risk allows you to respond earlier
and more effectively
31.
32. Educate
• Keep it simple
• Managing risk is more cost effective than fixing
problems
• Planning for risk allows you to respond earlier
and more effectively
• Constant, consistent messages
Part of daily responsibilities
33.
34. Key Questions
• What could go wrong?
• What will we do to prevent these things from
going wrong?
• What will we do if something does go
wrong?
• How will we pay for it?
36. Reward & Recognition
• Align reward and disciplinary system
with the culture you want to create
• “Doing the right thing” wins over “doing
whatever it takes”
• Communicate successes
• Recognize good risk reduction ideas
37.
38. Implement
• Keep it simple
• Communicate
• Strive for feedback … not perfection
• Be mindful of the gap
39. What gets measured gets
done
We do it because we have
want to
Safety is a priority value
True safety culture
transfers to off the job
40.
41.
42.
43. Developing a Program
Critical Steps
1. Establish purpose of the program
2. Assign responsibility for the plan
3. Acknowledge and identify risk
4. Evaluate and prioritize risk
5. Develop a written plan
6. Implement your plan
7. Review and revise the plan as needed
45. Employment & Personnel
• Hiring Practices
Applications
Background Checks
• Written Position Descriptions
• Handbook
Required Policies
Essential Policies
• Training
46. Employment & Personnel
• Personnel practices should be grounded in
legal, defensible practices
• Remember compliance; but don‟t assume
you‟ve got it right
Good intentions aren‟t good enough
Classifying workers as “exempt” because you can‟t afford
overtime pay
Classifying workers as independent contractors to reduce
employment expenses
[continued]
47. Facilities Management
• Own
Inspections, Maintenance and Repair
Use Checklists
Regularly Scheduled
Contractors (contracts and expectations)
• Rent
Lease
Clearly establishes duties & responsibilities for both
landlord and tenant
49. Managing Your Data
• Employee Use of Equipment/Systems
Technology Use Policy
Appropriate use of email and the internet
E-mail is the property of the nonprofit
E-mail and computer media is
subject to search at any time,
passwords notwithstanding
50. Managing Your Data
• Client Privacy
• System Security
• Safeguarding Your Website
[continued]
51. Managing Your Data
• Documentation Guidelines
• Records Retention
Policy
Schedule
• Storage
• Archiving and Recordkeeping
• Destruction
• Annual Review
[continued]
61. Risk Management
• Doesn‟t have to be overly complicated
• About simple principles and habitual practices
• Running your organization as best you can so
you may fulfill your mission to the fullest in an
uncertain future
• Good risk management = good management
62.
63. Thank you for your participation!
Ann Shanklin
Director of Loss Control
Nonprofits Insurance Alliance Group
ashanklin@insurancefornonprofits.org
831-621-6076