What is Risk Management?
"Scenario planning" is all about looking ahead and spotting opportunities - and threats. When a nonprofit is successfully managing risk it is taking a proactive approach to reduce the likelihood or severity of some unknown occurrence that could prevent or seriously derail a nonprofit from fulfilling its mission.
- When an executive director checks references or confirms the educational background of a potential new staff member, that executive director is managing the risk of hiring the wrong person;
- When a board decides to set aside money in a reserve account or adopts a fund development plan, it is managing the risk that someday there may not be enough cash on hand to satisfy a need for resources;
- When a nonprofit decides to back-up its data "in the cloud" or adopts a policy to protect its database with a password, risk is being managed;
- When a client mentions that there is an icy patch on the sidewalk and the nonprofit immediately deploys someone to remove the ice, risk is being managed; and
- When a volunteer attends a training, or a board member attends a board orientation, risk is being managed.
- Risk management opportunities occur in everything staff, board and program volunteers do on a day-to-day basis. In a risk-savvy nonprofit, everyone is a risk manager.
Share a primer on how nonprofits handle risk with your board members. (North Carolina Center for Nonprofits)
Learn about avoiding the ultimate risk: Loss of tax-exempt status
What is the Board's Role in Risk Management?
Risk management is everyone’s job at a nonprofit – but that’s especially true of the board of directors.
How Can Nonprofits Manage Risk?
Insurance is just one tool that nonprofits and others (businesses and individuals) use to manage risk. While insurance cannot prevent something bad from happening, it can transfer the financial impact of a bad result to an insurance carrier, in many cases limiting a nonprofit’s risk to the cost of insurance. The insurance industry offers special policies tailored for the needs of nonprofits. It is very important to select an insurance professional who is experienced in the nonprofit market, and take the time to make sure s/he understands your nonprofit’s mission, specific programs and activities, and clients, customers, employees, and volunteers.
Learn all about Directors and Officers Liability Insurance.
Protecting Your Nonprofit and the Board (Nonprofit Risk Management Center) explains why insurance is only one method of protecting nonprofits from risk.
Sample Risk Management Policies
- Frequently Asked Questions about insurance for nonprofits (Nonprofit Risk Management Center)
- Presentation on what insurance a nonprofit needs and why (Venable, LLP)
- Confused by "insurance-speak"? Review a Glossary of Risk Management and Insurance terms (Nonprofit Risk Management Center)
- Hallmarks of a Risk Aware Nonprofit
- Safe-Wise Consulting, an experienced for-profit consulting firm that works exclusively with nonprofits, also offers a free newsletter and online Resource Library that offers great articles, safety handbooks, training manuals and sample policies.
- Disaster Planning, Emergency Preparedness & Business Continuity (Nonprofit Coordinating Committee of New York)
- Managing Collaboration Risks: Partnering with Confidence and Success
- Managing Volunteers: Balancing Risk and Reward
- Arrive safe and sound: Tips to help with your nonprofit’s vehicle safety program
- Plan special events with care: Sound Advice for Functions and Events
- Learn about Combating the Increasing Risk of Online Fraud and Identity Theft.
- Crisis Management, the Media, and Your Nonprofit - how to respond to the media in a crisis.
- Crisis Communication Toolkit (Colorado Association of Nonprofits).
- The Care and Feeding of a Healthy Organization - how to maintain a steady income and develop sound investment strategies.
- Preventing embezzlement and fraud in a nonprofit setting.
- Lack of a succession plan is one of the core leadership capacities most frequently missing from a nonprofit's governance plans. Read about managing the risk of leadership succession.
- Creating an Effective Employee Handbook for Your Nonprofit - a guide on what to include and what not to include in an employee handbook.
- Employment Grievance Procedures and Internal Dispute Resolution - effective and legal employment practices to consider when resolving disputes.
- Help Wanted! Screening Challenges for 21st Century Nonprofits - tips on how to ensure that your screening process helps you hire the most suitable candidates.
- Keeping Your Organization Viable for the Future, by Dr. Peggy M. Jackson - an article on business continuity planning.
- Love those Deductibles!, by George L. Head - deciphering tricky clauses in liability and property insurance policies.
- Staff Training - calculating the importance of a trained staff to avoid incident.
- Sustaining Nonprofits During Economic Downturns, by George L. Head - how nonprofits are vulnerable during times of economic decline.
- Volunteers: Handle with care (Oklahoma Center for Nonprofits)
- What to know before you purchase Directors and Officers (“D&O”) liability insurance
Also visit the section on Risk Management in the Council of Nonprofits' online bookstore.