By Gordon B. Coyle
Today, nonprofit organizations are facing their toughest challenges yet. Funding sources are decreasing or limiting support and the need for their services is increasing. It’s a “perfect storm” of variables that test the management and ability of nonprofit leadership to deliver on their mission and core services.
While dealing with the “new realities” of our economy, leadership must also deal with the risks associated with operating a nonprofit. And as the environment becomes more difficult, the risks of operating the organization will increase, too.
Most all nonprofits are accustomed to purchasing insurance to protect their largest risks but many are not undertaking a formal approach to managing risk. The advantages of formalizing an approach to risk management are many, but first it’s important to understand that risk management is a long-term plan based on a four step process:
1. Identify the risks and exposures the organization faces – both large and small.
2. Develop strategies to deal with those risks – insurance is the most common, but there are other processes to mitigate, control, and manage risk that are important to understand.
3. Implement the plan from the various strategies developed.
4. Monitor and adjust to maximize results.
The identification of risk may be the most important step in this process that is often revealing and surprising to nonprofits. Using a checklist or audit approach to risk identification will bring out risks arising from the board of directors, volunteers, employees, clients and beneficiaries, general operations, fund raising, money handling, systems and cyber security and more.
Risk identification will lead to conversations about operations and processes. Plus, it usually uncovers potential methods to improve efficiencies, standards and ultimately the risks the organization faces. Working with a firm, skilled in the management of risk, to deliver solutions to a nonprofit can take those conversations and move them towards the second step in the Risk Management Process – Strategies & Solutions.
And by prioritizing and working in order – from the organizations largest, most potentially damaging risks to the smallest, least significant risks – will ensure it is mitigating risk and protecting itself from risk. Then, work through the remaining steps to make sure the organization is maximizing its protection.
Deploying a solid risk management strategy could be very advantageous in today’s economy as a method to squeeze efficiency and productivity out of every donor dollar while protecting the organization’s bottom line.
Gordon B. Coyle, CPCU, ARM, AMIM-President, is a 30-year veteran of the insurance industry, Gordon Coyle has extensive experience working within the mid-market business sector; helping to reduce risk, prevent loss and lessen costs through a unique and diagnostic risk management process. Coyle has demonstrated professional competence by earning the Chartered Property Casualty Underwriter (CPCU), Associate in Risk Management (ARM) and Associate in Marine Insurance Management (AMIM) designations. Coyle continues to share his knowledge, furthering his influence, as a frequent guest speaker. He actively participates in educational lectures aimed at niche industry groups as well as provides his own sought-after seminars regarding effective risk management strategies, insurance topics, and general business issues.
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Effective Loss Prevention Techniques For Nonprofits
By Gordon B. Coyle