Risk Management
I.
Benefits of Risk
Management
a.
Intangible
i.
Increased confidence
ii.
Resources to
cover risk assured
iii.
Improved morale
iv.
Additional resources
available for core activities
v.
Support from key
stakeholders
vi.
Funder confidence
b.
Tangible
i.
Fewer accidents/incidents
ii.
Lower insurance
costs (fewer claims, greater organizational sophistication)
iii.
Increased program
enrollment
iv.
Less effort to
market insurance program
II.
Starting a Risk
Management Program
a.
Assigning
responsibility for risk management
i.
Single point of
contact (paid or volunteer)
ii.
Risk management team
1.
people with
working knowledge of the risks
2.
outside advisers
3.
volunteers who
have expressed concerns
b.
Risk management
goals (narrow goals increase chance of success)
c.
Finding risk
management in current programs
III.
The Risk
Management Process
a.
Consider the
context (personnel, financial, past experience, reuirements)
b.
Identify risks
i.
Be specific
ii.
May identify
categories of risk, or analyze by organizational structure
c.
Evaluate risks
i.
Single out
recurring downside risks that can be avoided through simple or inexpensive
means
ii.
Identify risks
that rarely occur but would seriously threaten the mission and sustainability
of the organization
iii.
Assign scores,
based on frequency and severity
d.
Decide what to do
and take action (Risk/Rank/Action Steps/Due Date/Responsible Party)
e.
Monitor and
adjust
i.
widely accepted
ii.
inconsistently
followed
iii.
unintended policy
violations
iv.
too costly in
light of risk
v.
neutral effect
IV.
Applying the Risk
Management Framework
a.
Protect
vulnerable clients from harm
b.
Avoid theft of
financial resources by insiders
c.
Minimize wrongful
employment practices
d.
Ability to cope with
crises (natural or human-caused)
e.
Minimize potential
liability of volunteers
V.
Volunteer
Liability and Risk Management
a.
Volunteer negligence
i.
Respondeat superior—the corporation is responsible for acts and omissions
of its agents
ii.
Exceptions: acting outside scope of authority or in
direct violation of organization’s rules
b.
Claims by
volunteers
i.
Injuries suffered
by paid staff are insured under mandatory workers’ compensation coverage
ii.
Accident policy—or
at least consider how to react when volunteer is injured.
iii.
Volunteers do not
have standing to sue for wrongful employment action
iv.
Claims alleging
defamation may be addressed on the merits (information portraying a volunteer
in a negative light should be shared only with persons who need to know it).
c.
Fear of Liability
among Volunteers
i.
VPA—Volunteer Protection
Act of 1997
ii.
Nonprofit, and
not its volunteers, is responsible for negligent acts stemming from operations
d.
State Volunteer
Protection Laws—each state has own standards
i.
Will not cover
willful or wanton conduct, gross negligence, or wrongful acts while operating a
motor vehicle
ii.
Volunteers who
are serving smaller, more informal organizations are at greater risk
e.
Risk Management
for Volunteer Programs
i.
Apply common
sense before dollars and cents
ii.
Involve volunteers
in risk management planning
iii.
Provide explicit
direction
iv.
Maintain standards
v.
Discuss responsibilities
openly with partners
vi.
Establish and
monitor policies
vii.
Guard client
privacy
viii.
Put expectations
and duties in writing
ix.
Cast a wide net
by making risk management a shared responsibility
VI.
Role of Insurance
in a Risk Management Program
a.
Insurance market
cycles and developments
b.
Insurance Dos and
Don’ts
c.
What is
appropriate insurance coverage?
i.
Costs that can be
readily predicted on the basis of past experience should be finance internally
ii.
Ultimate goal is
to obtain appropriate coverage at an affordable premium
iii.
CGL (Commercial
General Liability) coverage
iv.
Commercial auto
liability and physical damage
v.
D&O
(Directors & Officers) liability
vi.
Professional
liability
vii.
Improper sexual
conduct/sexual abuse coverage
viii.
Nonowned or hired auto
ix.
Property
insurance
x.
Business
interruption and extra expense
xi.
Fidelity &
crime insurance
xii.
Umbrella
insurance
xiii.
Workers’
compensation coverage
xiv.
Accident insurance
xv.
BOP (Business
owners’ policy)
© 2004 A.J.Filipovitch
Revised 2 October 2005