Understanding Understanding the Risks for Not-for-Profit Organisations
Posted on 21st May 2024 at 10:25
Not-for-profit organisations play a vital role in providing essential social services that benefit the community and their members. Even though these organisations don't focus on selling products or generating profits, they still face numerous risks that can impact employees, volunteers, senior leaders, board members, and, most importantly, their mission.
Various claims can be brought against not-for-profit organisations. For instance, a volunteer might file a legal action against senior leaders for discrimination or harassment, resulting in costly consequences. Additionally, if someone is injured at one of your events or on your property, they could make a claim against you. Below is an overview of these potential risks to help you identify areas for improvement in your risk management and insurance programmes.
Risks Faced by Not-for-Profit Organisations
1. Directors and Officers (D&O) Liability:
Directors and officers of not-for-profits take on a level of risk with each decision they make. Claims can come from employees, clients, volunteers, regulators, and donors, potentially damaging their reputation and personal finances.
2. Volunteer Injuries:
Not-for-profits rely heavily on volunteers. If a volunteer is injured while serving, the organisation could be held liable. Since public liability policies often do not cover volunteers, many organisations opt for a stand-alone insurance policy to protect them.
3. Allegations of Sexual Assault:
Due to frequent, unsupervised interactions between children and trusted adults, not-for-profits are at risk for false allegations of sexual assault. Regardless of the legitimacy, these allegations can have serious repercussions for the organisation.
4. Property Damage:
Property such as buildings, office equipment, data, and signage is crucial for not-for-profits. Losses due to fires, theft, vehicles, or vandalism can cause significant financial harm and disrupt operations.
5. Professional Indemnity:
Providing services like counselling or training exposes not-for-profits to professional indemnity risks. Mistakes or errors can lead to legal actions if they harm a third party.
6. Cybersecurity Threats:
With the increasing use of databases for records, not-for-profits are targets for cyber-criminals. Handling cheques and payment information heightens the risk. Inadequate cybersecurity training for volunteers and employees can lead to ransomware, viruses, phishing, and malware attacks.
7. Motor Vehicle Exposures:
Employees and volunteers may need to use vehicles, posing potential risks. Standard motor vehicle policies often do not suffice when personal vehicles are used for organisational tasks, necessitating additional coverage.
8. Employers’ Liability:
Injuries to employees or volunteers can lead to costly liability claims. Common workplace accidents include slips, trips, falls, and repetitive task injuries, which can increase organisational costs.
For More Information
Implementing proper risk management practices can mitigate certain risks, but no system guarantees an incident-free workplace. Thus, collaborating with a qualified insurance broker is essential to assess your exposures and secure the right insurance coverage. For more information, contact BIP Ltd today.
Tagged as: Cyber Security, Directors And Officers, Insurance Coverage, legal risks, Notforprofit, Professional Indemnity, property protection, Risk Management, Volunteer Safety, Workplace H&S
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