Ann Shanklin: Risk Management Basics
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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.
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Ann Shanklin: Risk Management Basics
- 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”
- 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
- 10. REPUTATION A reputation that took decades to build can be threatened by a single event.
- 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
- 15. A Risk Culture • Risk management is most effective when … It becomes part of the organization‟s culture Intuitive Habitual
- 16. A Risk Culture It is a shared responsibility Employees Management Board of Directors Professional Advisors [continued]
- 19. “Risk is like fire: If controlled it will help you; if uncontrolled it will rise up and destroy you.” ~ Theodore Roosevelt
- 22. Risk Management Mindset • Think about risk and risk management in a simple and memorable way
- 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
- 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
- 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
- 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
- 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
- 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
- 44. Examples of Risk by Type
- 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
- 48. Facilities Management • Breakrooms; Kitchens • Playground • Visitors • Safety Emergency Plans Crime Prevention [continued]
- 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]
- 52. Client Transportation • Owned Vehicles Insurance Fleet Safety • Personal Auto Insurance Use Policy
- 53. Client Transportation • Field Trips Waivers • Emergency Procedures [continued]
- 54. Client Activities • Code of Conduct • Informed Consent; Waiver and Release forms • Facility/Venue Management • First Aid/Injuries
- 55. Client Activities • Athletics Appropriate protective equipment Safe playing conditions Safety rules Trained adult supervision [continued]
- 56. Volunteers • Selection Develop a position description Use an application Be selective Use interviews • Handbook • Supervision
- 57. Partnership Risks • Written documentation Memorandum of Understanding
- 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
- 63. Thank you for your participation! Ann Shanklin Director of Loss Control Nonprofits Insurance Alliance Group ashanklin@insurancefornonprofits.org 831-621-6076