Managing Risk in Uncertain Times Presented by Peter Andrew CEO Council Services Plus A subsidiary of NYCON www.councilservicesplus.com
What is Risk? A situation involving exposure to danger, harm or loss Uncertainty that you are willing to take to realize an opportunity or gain
Calculated Risk Taking the chance of exposure to risks after its advantages & disadvantages have been carefully weighed and considered
What is Risk Management? A discipline for dealing with uncertainty Involves understanding, analyzing & addressing risk to make sure organizations achieve their objectives. Must be proportionate to the type & complexity of the nonprofit & resources involved. ?
What is Risk Management? A “system” for making informed choices A model for responding to events
Fidicuary Risk Management The risk that may be responsible for a trustee or other fiduciary not performing their duties or achieving the best value with relation to the best of the beneficiary's interests
Risk Management is helpful because it can... reduce the likelihood of injuries minimize the adverse effects of losses demonstrate diligence
The Risk Management Process 1. Establish the context risk averse? available resources, including time overall strengths, weaknesses and threats
The Risk Management Process 2. Identify risk what is it we don’t expect to occur? 3. Evaluate and prioritize risk frequency severity
The Risk Management Process 4. Decide how to control your risks choose practical strategies consider available “tools” avoidance modification sharing retention
The Risk Management Process 5. Monitor and update the risk management program as needed
Who’s on first? Fully-staffed RM function All volunteer risk management committee Hybrid approach
Risk Management Committees Responsibilities identify exposures (risks) develop risk control program establish risk financing strategy Composition staff volunteer outside professionals
Risk Management Frameworks Functional categories Assets at stake Three questions
Common Risks Facing Nonprofits Client injury Volunteer injury
Common Risks Facing Nonprofits Allegations of wrongdoing Loss of core funding
Common Risks Facing Nonprofits Alleged wrongful employment practices Funder discontent
Common Risks Facing Nonprofits Board member discontent Volunteer recruitment challenge
What Strategies Work and Why? Apply liberal doses of common sense Involve your volunteers
What Strategies Work and Why? Provide explicit direction Praise and punish
What Strategies Work and Why? Don’t assume Establish policies and follow through Provide guidance on privacy issues
What Strategies Work and Why? Use written agreements to spell out requirements
What Strategies Work and Why? Make risk management everyone’s responsibility
What Strategies Work and Why? Consider insurance in context
Insurance The nonprofit’s policies CGL D&O Auto liability Professional liability Are volunteers “insureds” under these policies?
Insurance Volunteer liability policy may be packaged with an accident policy personal liability coverage claims arising out of volunteer’s duties exclusions: professional services or property damage (property in CCC of volunteer)
The Changing Marketplace Review your policies Review your partnerships Understand your loss experience, appetite for risk Don’t delay