Nonprofits Survey on Risk Awareness, Exposures Provides Insights
A recent survey by a global insurance brokerage of nonprofit entities shed some interesting light of risk awareness and risk exposure among organizations with revenues exceeding $20 million. The area of focus for the nonprofits surveyed included human services, community service and foundations, religious entities, arts and culture, education, fraternal or membership association, environment and animals, and other. CEOs, CFOs, directors, presidents, vice presidents and senior management members were the majority who participated in the survey.
There were several interesting findings that the survey honed in on, including the fact that in half of the organizations questioned, the finance department was primarily responsible for managing corporate risk and insurance. Just 22% of those surveyed said they employed dedicated risk managers in their organizations. Not surprisingly as these are emerging risks among many industries, the top three hazards among those surveyed included: employment-related risks, including workplace injuries (workers comp); acts, errors or omissions in governance and management (D&O liability); and acts, errors or omissions in providing professional services (Professional Liability).
In terms of risk management priorities, the top three included: indentifying and assessing current and future threats to the organization’s assets; reducing insurance premiums; and business continuity planning. What’s more, the nonprofits said they wanted to work with insurance advisors that understand their specific sector, with the majority of their insurance spend on Directors & Officers, Workers’ Compensation & Employers Liability and Commercial General Liability, which falls in line with some of their hazard concerns.
The survey also found that larger organizations as measured by annual revenue tend to engage their board in risk management, while smaller operations that generally lack professional risk management expertise and staffing in-house should be promoting greater board-level engagement.
Moreover, some of the top strategic challenges discussed in the survey didn’t quit sync with the nonprofits’ insurance portfolio. For example, the survey cites that the majority of respondents identified “diversifying revenue stream” and “market positioning and competition for funding” as top challenges. To meet these challenges, additional fundraising efforts will be required with a greater reliance on more media and technology. This highlights the potential for greater exposure to data breaches and privacy issues, yet Cyber Liability insurance, according to the survey, fell within the bottom five types of insurance currently in a nonprofit’s portfolio.
At Caitlin-Morgan we provide insurance and risk management services to nonprofits, including in the human resources and community services and education areas. We can help you pinpoint areas of exposures that need further protection for your nonprofit clients and help in implementing risk-mitigation strategies. Give us a call at 877.226.1027.