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Volume 14, No. 2, May/June 2005 A publication of the Nonprofit Risk Management Center NEW! Risk Management Essentials Series R by Linda Varnado Visit www.nonprofitrisk.org to check out a special offer from the Nonprofit Risk Management Center. The Risk Management Essentials Series takes the guesswork out of building a library of valuable risk management resources. We’ve assembled our best-selling books, whose contents apply to all nonprofits, in an affordable package. You’ll save 20% off the price of the books if purchased separately. Plus, shipping is free for the bundle, and we’ll send them to you in a handy totebag. The cost is only $129. To order, visit www.nonprofitrisk.org or call (202) 785-3891. ecently, my newspaper in San Antonio—and many others across the nation—carried an article 1 with a startling headline: “Body lay in kitchen for 2 years.” The headline compelled me to read the short news item. The story reported that an elderly woman in California had fallen in her kitchen in mid-2003, died a couple of weeks later of her injuries, and was not found until March 2005. That sounded plausible, especially if the person lived alone and had no close neighbors. But that wasn’t the case here. As it turns out the woman’s son and husband had just stepped around her body and continued to use the kitchen for all that time. The situation was investigated only after a neighbor reported not seeing the woman in about a year. I shook my head at those images and then went on with my work. That article did not go away so easily, however. The more I thought about that particular situation, the more I believed it could be a metaphor for many situations. Then I began to think about risk management in nonprofit organizations. Nonprofits have become increasingly skilled at identifying and managing obvious risks. And slowly but surely we’re getting more astute at recognizing subtle risks. But are there times when we step around delicate or difficult risk management issues? Some of the situations that immediately came to mind were: People issues Every nonprofit has a stack of rules (often collected in the form of an Employee Handbook or Volunteer Handbook) that describe key policies. But many organization leaders avoid confronting the issue of an employee (or volunteer) who isn’t performing as expected and needed. Consider the situation where everyone knows that an employee’s work is substandard, but management fails to take action. continued on page 2 Stepping Around or Stepping Up? Coping with difficult risk management issues
Transcript
Page 1: Stepping Around or Stepping Up?

Volume 14, No. 2, May/June 2005A publication of the Nonprofit Risk Management Center

NEW! Risk Management Essentials Series

Rby Linda Varnado

Visit www.nonprofitrisk.org to check outa special offer from the Nonprofit RiskManagement Center. The Risk ManagementEssentials Series takes the guesswork out ofbuilding a library of valuable risk managementresources. We’ve assembled our best-sellingbooks, whose contents apply to all nonprofits, inan affordable package. You’ll save 20% off theprice of the books if purchased separately.Plus, shipping is free for the bundle, and we’ll sendthem to you in a handy totebag. The cost is only$129. To order, visit www.nonprofitrisk.org orcall (202) 785-3891.

ecently, my newspaper in SanAntonio—and many othersacross the nation—carried an

article1 with a startling headline: “Bodylay in kitchen for 2 years.” The headlinecompelled me to read the short newsitem. The story reported that an elderlywoman in California had fallen in herkitchen in mid-2003, died a couple ofweeks later of her injuries, and was notfound until March 2005. That soundedplausible, especially if the person livedalone and had no close neighbors. Butthat wasn’t the case here. As it turns outthe woman’s son and husband had juststepped around her body and continuedto use the kitchen for all that time. Thesituation was investigated only after aneighbor reported not seeing thewoman in about a year. I shook myhead at those images and then went onwith my work.

That article did not go away soeasily, however. The more I thoughtabout that particular situation, themore I believed it could be a metaphorfor many situations. Then I began tothink about risk management innonprofit organizations. Nonprofitshave become increasingly skilled atidentifying and managing obvious risks.And slowly but surely we’re getting moreastute at recognizing subtle risks. But arethere times when we step arounddelicate or difficult risk managementissues? Some of the situations thatimmediately came to mind were:

People issuesEvery nonprofit has a stack of rules(often collected in the form of anEmployee Handbook or VolunteerHandbook) that describe keypolicies. But manyorganization leaders avoidconfronting the issue of anemployee (or volunteer) whoisn’t performing as expected andneeded. Consider the situationwhere everyone knows that anemployee’s work is substandard, butmanagement fails to take action.

continued on page 2

Stepping Aroundor Stepping Up?Coping with difficult risk management issues

Page 2: Stepping Around or Stepping Up?

2 Community Risk Management & Insurance • May/June 2005

Volume 14, Number 2May/June 2005

Published three timesannually by the NonprofitRisk Management Center,1130 Seventeenth Street, NW,Suite 210, Washington, DC20036, (202) 785-3891, FAX:(202) 296-0349, orwww.nonprofitrisk.org

Questions about the contentof this publication should bedirected to the editor, BarbaraOliver. For information onadvertising contact SuzanneHensell. They can be reachedat (202) 785-3891.

Sheryl AugustineCustomer Service Representative

[email protected]

Suzanne M. HensellProgram and Research Assistant

[email protected]

Melanie L. HermanExecutive Director

[email protected]

Barbara B. OliverDirector of [email protected]

John C. PattersonSenior Program [email protected]

Special AdvisorsGeorge L. Head, [email protected]

Richard B. [email protected]

Staff Directory(all staff can be reached

at 202.785.3891)

continued on page 3

Stepping Around or Stepping Up?continued from page 1

Sally is always the last to arrive andthe first to leave each work day. Sheis personable and can find hundredsof things to do to help hercolleagues, but when it comes todoing her own work, some thingsnever seem to get done on time. Theaccounting reports take extra timesince she doesn’t know how to usethe software properly. Her process forgetting materials ready for a boardmeeting is frustrating formanagement and the outcome isn’talways accurate.

Jim is a willing volunteer and alwayswants to be part of anything theorganization’s doing. He seems to berelated to some major donors insome way. The problem is thatwhenever Jim’s involved in anactivity, the volunteer director cancount on spending a lot of timesoothing hurt feelings of othervolunteers—and trying to keep Jimfocused on what he’s supposed to bedoing.

Property issuesNonprofit leaders understand that

facilities and equipment make it possibleto deliver mission-critical services. Yetsome organizations fail to implementpolicies and procedures to safeguard thephysical resources necessary for servicedelivery. “We don’t need any morerules!” or words to that effect, are heardthroughout agencies. It would berefreshing to operate in an environmentwhere everyone knows intuitively whatto do and how to do it. That,unfortunately, is not the case.

The agency has several vehicles to beused for business purposes—going tohealth fairs, taking supplies toshelters, and handling all theroutine day-to-day transportationactivities. Keys are in a box on thereceptionist’s desk and easilyaccessed. There is no process for

verifying that drivers are licensed orhave good driving records and thereis no checkout process for thevehicles. One day, the executivedirector is involved in a seriousaccident in a car that was scheduledfor maintenance. After aninvestigation, it is learned that he

has been cited for reckless drivingseveral times in the past fewmonths.

The agency has a nice facility exceptfor one thing—the roof leaks almostevery time it rains. The solution hasbeen to put buckets under the leaksand make sure the floor is wiped up.There has been no examination ofthe roof itself since the board hasnot been told of the recurringincidents.

Financial issuesThe risk of not receiving an

expected grant or a precipitous drop indonations may be left out of anotherwise comprehensive riskmanagement plan. Yet these risks areshared by virtually all nonprofits andin some cases are among the risks mostlikely to materialize. Sometimesnonprofit leaders are so focused on oneaspect of an organization’s operationsor the big-picture mission they fail tosee the daily details.

Agencies with sizeable bequests often

Page 3: Stepping Around or Stepping Up?

3Community Risk Management & Insurance • May/June 2005

Stepping Around or Stepping Up?continued from page 2

feel that their money worries areover. Making payroll is no longer acause for heartburn and gone are thedays of scraping every dollartogether in the eleventh hour. Butthe nonprofit will rapidly return tothe original, money-challenged stateif actions aren’t taken to sustainfundraising. What’s the board’scommitment to take action?

The organization has had itssignature special event for the lastten years. The event earned its peakprofit of $75,000 in year 5 of theevent. The event has been on thedecline (from a financialstandpoint) since then, raising a netof $47,000 most recently. The event’slong-time proponent has beenhaving health problems and no oneelse knows the intricacies of theoperation.

Goodwill issuesWhat organization can afford to

lose the support of the community itserves or the community at large? That’swhat’s at risk every day in everyorganization if we don’t operate withhonesty and integrity.

Is your agency seen as “the” place intown to volunteer? Are you regardedas open and inclusive, or just anorganization run by a small clique?Are there opportunities foreveryone—or just “some” people?Are perceptions about yournonprofit accurate?

When your organization asks forfunding—or reports its activities tothe community—is thisaccomplished by presenting clear,honest information, or is theinformation manipulated to presenta not-so-accurate picture of youractivities? Does your annual report,for example, stand up toquestioning?

Every time we fail to take responsibleaction about people issues, propertychallenges, financial issues, ormaintaining goodwill, we are juststepping over that body in our ownkitchen. If something doesn’t change,someone from outside is going to realizethat something has been missing forseveral years and will make a report thatrequires follow up and action. Thequestion is, are you willing to identifyyour situations, then resolve your issuesbefore outsiders arrive? The choice ofstepping over—or stepping up—must beanswered by management andleadership. The choice made affects allstakeholder groups in a nonprofit.

Linda Varnado is Volunteer ProgramDirector, Audit Services at the AmericanRed Cross and also serves on the Board ofDirectors of the Nonprofit Risk ManagementCenter. Linda can be reached at:[email protected].

1 Phillips, Kelli. [Knight-Ridder] “Bodylay in kitchen for 2 years.” San AntonioExpress News, 22 March 2005: Nation.

“Every time we fail to

take responsible

action about people

issues, property

challenges, financial

issues, or

maintaining

goodwill, we are just

stepping over that

body in our own

kitchen. If something

doesn’t change,

someone from outside

is going to realize

that something has

been missing for

several years and

will make a report

that requires follow

up and action. “

Page 4: Stepping Around or Stepping Up?

4 Community Risk Management & Insurance • May/June 2005

Board of Directors

PresidentSamuel C. Bennett

The Salvation ArmyWest Nyack, NY

TreasurerMichael DownsPension Boards -

United Church of ChristNew York, NY

SecretaryDebra C. GriffithBoy Scouts of America

Irving, TX

Karen BeavorGeorgia Center for Nonprofits

Atlanta, GA

Arthur F. BlinciAdventist Risk

Management, Inc.Riverside, CA

Pamela E. DavisAlliance of Nonprofits

for Insurance,Risk Retention Group

Santa Cruz, CA

Judy NolanAmerican Red Cross

Falls Church, VA

John B. PearsonBig Brothers of Massachusetts Bay

Boston, MA

Kim St. BernardGirl Scouts of the USA

New York, NY

Marty ScherrInternational Social Service

Baltimore, MD

Jo Sachiko UeharaWashington, DC

Linda P. VarnadoAmerican Red Cross

San Antonio, TX

Jeffrey D. WeslowHousing Authority Insurance Group

Cheshire, CT

continued on page 5

Love Those Deductibles!by George L. Head, PhD, CPCU,ARM, CSP, CLU

S

nothing for any loss that is $500 or less;It pays $1 for a $501 loss; it pays $600for an $1,100 loss; and only for a loss ofat least $20,500 will this policy pay its$20,000 face. In contrast, with a $500franchise deductible, this $20,000 policyagain pays nothing for losses of $500 orless, but it pays the full amount of anyloss that exceeds $500: $501 for a $501loss; $1,100 for a $1,100 loss, up to the$20,000 for a $20,000 loss. In stillfurther contrast, a $500 disappearingdeductible, disappearing at $10,000,

would still pay nothing for aloss that did not exceed

$500, but it would paythe full amount of any

loss that wasbetween $10,000

and the $20,000face amount ofthe policy. Forany lossbetween $500and $10,000,the policywould pay morethan 100% of the

portion of theloss over $500—this

percentage increasing as the lossapproaches $10,000.

These types of deductibles—straightper-loss, franchise, and disappearing—all apply to each event that a givenproperty or liability insurance policycovers. As an alternative, deductiblescan apply to time periods, such as ayear, with the deductible aggregating allthe insured losses that occur during thattime period.

For example, a $100,000 annualaggregate deductible in a $1 Milliongeneral or professional liability policywould pay nothing toward any of threeotherwise covered judgments $50,000,$6,000, and $40,000—against an insuredthat may occur early in this insured’spolicy year. These judgments wouldtotal only $96,000, or $4,000 short of

Love?houldn’t it be “Hate ThoseDeductibles?”—those devilishclauses in many property and

liability insurance policies that make usas insureds pay the first part of almostevery loss? Isn’t it because of deductiblesthat insurance never seems to do thewhole job—always leaving us to pay agood bit of every loss before theinsurer pays anything? And if theloss is less than thedeductible, the insurernever paysanything—eventhough we alwayspay ourpremiums. Whata deal—forinsurers, that is!!

I appreciatethese thoughts,and hopefully Iunderstand why manyleaders of nonprofits,hostile toward deductibles,try to choose the smallest ones thattheir insurers will allow. Yet I will tryhere to be “the devil’s advocate,” toexplain why any organization,nonprofit or profit seeking, shouldchoose the largest deductibles it cansafely afford. My central point: optingfor the biggest affordable deductibles (1)lowers an organization’s long-runaverage loss costs, (2) motivates its staffand management to operate safely, and(3) leads to the best allocation of itsoverall insurance budget.

Types of DeductiblesThis reasoning applies to any type

of deductible. The most popular form ofdeductible is a straight per-lossdeductible. For example, a $500 straightper-loss deductible in a $20,000 propertyinsurance policy, an insurer pays

Page 5: Stepping Around or Stepping Up?

5Community Risk Management & Insurance • May/June 2005

Love Those Deductibles!continued from page 4

continued on page 8

“In property policies,

the insurer is not

involved at all with

losses that fall within a

deductible. The insured

pays both for the loss

itself and for the “loss

adjustment,” which is

the cost of arranging for

the repairs—cleaning

up, getting bids,

obtaining building

permits, and the like.”

Special Advisor, Nonprofit RiskManagement Center

the $100,000 annual aggregatedeductible. But if the next judgmentagainst this insured were $25,000, theinsurer would pay $21,000 of it, which isthe remainder of the total claim afterthe insured has absorbed the $4,000 leftof the $100,000 annual aggregatedeductible. For any further judgmentsduring the rest of this insured’s policyyear, the insurer would pay the fullamount of the judgement, up to$1 Million per judgment.

Still thinking about different typesof deductibles, there is one moreimportant difference betweendeductibles in property policies and inliability policies. In property policies,the insurer is not involved at all withlosses that fall within a deductible. Theinsured pays both for the loss itself andfor the “loss adjustment,” which is thecost of arranging for the repairs—cleaning up, getting bids, obtainingbuilding permits, and the like. Aproperty insurer is happy leaving theseadministrative costs to the insured whenthe loss clearly falls within thedeductible. But in liability insurance,there is almost always the possibilitythat even the most minor claim, ifimproperly handled, may mushroominto a very large lawsuit. To preventthis, most liability insurers want to beinformed of every claim and to superviseand to absorb the cost of settling ordefending every potentially insuredclaim. In liability insurance, defense istoo crucial to the ultimate cost of even

the apparently smallest claim to be leftto an insured. Hence, in liabilityinsurance, only the actual amount ofpaid claims (not the liability lossadjustment costs) are charged as part ofthe deductible the insured must absorb.

This background on deductiblesmakes it clearer why embracingdeductibles in its insurance policieslowers an organization’s loss financingcosts, motivates better loss controlthroughout its operations, and helps itallocate its insurance budget to the lossexposures for which insurance is mostneeded.

Cut Premium Rates and RiskFinancing Costs

Hopefully, none of us insuresagainst such foreseeable, budgetablelosses that we all know are coming in

our personal lives: automobiletires that go flat or broken back-door windows, for example.These are “accidents,”conceptually no different thanautomobiles crashing onhighways or hurricanes blowingdown whole houses. Yet, if wewere to try to insure against flattires or broken backdoor panes,think how our Homeowners andFamily Automobile policypremiums would skyrocket! And

Page 6: Stepping Around or Stepping Up?

6 Community Risk Management & Insurance • May/June 2005

continued on page 7

2005 Risk Managementand Finance Summit forNonprofitsAbout the Conference

he Risk Management and FinanceSummit for Nonprofits (formerlythe Nonprofit Risk Management

Institutes) is an educational event thatdraws leaders from nonprofits in everycorner of the USA, as well asprofessional advisors (lawyers, CPAs andinsurance professionals) who assistnonprofits. The Summit offers a timeand place for the sharing of ideas, the

opportunity toacquireinformation forinformed decision-making and awelcomingenvironment forchampions of riskmanagement inthe nonprofitsector. Witheducationalsessions covering abroad spectrum ofhot topics in thefield, the Summitis a not-to-be-

missed event for those who want tostrengthen risk management in theirorganizations and thereby enablegreater focus and resources to bedevoted to mission fulfillment.

The principal sponsor of theconference is the Nonprofit RiskManagement Center, a nonprofitresource center based in Washington,D.C. For more than 15 years, the Centerhas provided a wide range of free andaffordable services to U.S. nonprofitsand those in other parts of the world.This year’s conference is brought to youthrough a collaboration of leadingCalifornia-based organizations:California Association of Nonprofits(www.CAnonprofits.org), CompassPointNonprofit Services

T(www.compasspoint.org), and theNonprofits’ Insurance Alliance ofCalifornia (www.niac.org).

About the FormatThe Risk Management and Finance

Summit for Nonprofits offers a unique“conference within a conference”format. By collaborating, the principalsponsors have joined forces to providean affordable, content-filled programsuitable for risk management, financeand other professionals working in thenonprofit sector. The program consistsof three overlapping conferenceagendas.

The first agenda, sponsored by theNonprofit Risk Management Center, coversa wide range of risk management topicswith three concurrent tracks. Scheduledworkshops include sessions on“Managing the Risk of Sexual Abuse,”“Workplace Safety,” “NegligentSupervision Suits,” “TransportationRisks,” “Charitable Immunity and TortReform,” among others.

The second agenda, sponsored byCompassPoint Nonprofit Services, is“Beyond the Bottom Line,” a programfor nonprofit finance professionals whoplay a senior role at their organizationsand have 5+ years of finance experience.Scheduled sessions include “TimeTracking: What Staff Really Do andHow It’s Paid For,” “Case Studies: PeerPresentations of Real-life FinancialChallenges and Solutions,” and “Risk ofFraud: What’s the Role of the AuditCommittee and the Board of Directors?”

The third agenda, sponsored by theCalifornia Association of Nonprofits, is anonprofit accounting boot camp,suitable for both new and veteranfinance and program managers whowork for nonprofits or who act asadvisors to nonprofits. A speciallydiscounted registration fee is available

Page 7: Stepping Around or Stepping Up?

7Community Risk Management & Insurance • May/June 2005

to persons who register for all threeprograms. Keep in mind that you maychoose to attend sessions from one, twoor all three agendas.

Who Should Attend?The 2005 Summit is designed for

nonprofit CEOs, CFOs, financeprofessionals, risk managers, programmanagers, board members, departmentheads and professional advisors servingnonprofit organizations. Veterannonprofit professionals and newmanagers will feel at home at thischallenging, information-packededucational event.

Headquarters HotelAll conference workshops and

activities will be held at the ArgonautHotel, conveniently located onFisherman’s Wharf in San Francisco.Overnight accommodations areavailable at the hotel for the specialconference rate of $175 per night. Thisspecial rate is guaranteed forreservations made before September 1,2005. To reserve a room at the Argonaut,call (866) 415-0704.

Corporate SponsorsThe Center is grateful to the

following organizations for theirgenerous sponsorship of the Summit:

q CAN Insurance Servicesq Chapman and Associatesq Charity Firstq Chubbq David Szerlip and Associatesq The Hartford Steam Boiler

Inspection and Insurance Companyq Heffernan Insurance Brokersq IntelliCorpq Markel Insurance Companyq Monitor Liability Managers, Inc.q Munich-American RiskPartnersq Mutual of Americaq Nonprofits’ Insurance Alliance of

Californiaq Philadelphia Insurance Companiesq Riverport Insurance Companyq Ze/USI Insurance Services

Each fall insurance agents and brokers who specialize in servingnonprofits gather to share wisdom and insight and discuss currentand emerging challenges. For insurance specialists, the Forum hasbecome a highlight and “not-to-miss” component of the NonprofitRisk Management Center’s annual conference. This year’s programcontinues that tradition. If you are an agent or broker with asizeable or growing book of nonprofit accounts, plan to join yourcomrades in the industry for a fast-paced Forum covering threecritical topics:q “Resources for Nonprofit Insureds”—Learn what’s

available, how you can help your insureds locate usefulresources, and how doing so brings a “value-added”component to your menu of services.

q “How to Conduct a Risk Assessment”—Do you offer toconduct “risk assessments” for your nonprofit insureds? If soyou’ll want to find out how to go about conducting a riskassessment that your insureds will value.

q “Risk Management for Your Agency or Brokerage”—With regard to risk management, is your agency like theshoeless cobbler’s child? It’s time to focus on the risks you faceand adopt practical strategies for managing those risks.

Forum for Insurance Brokers and AgentsForum for Insurance Brokers and AgentsForum for Insurance Brokers and AgentsForum for Insurance Brokers and AgentsForum for Insurance Brokers and AgentsWednesday, September 28, 9:30 am-12:30 pm

ScholarshipsThe Center is also grateful to the Public Entity Risk Institute (PERI) foronce again sponsoring the conference scholarships program. To learnmore about the program, visit www.nonprofitrisk.org and click on thelink for the Summit.

Page 8: Stepping Around or Stepping Up?

8 Community Risk Management & Insurance • May/June 2005

Love Those Deductibles!continued from page 5

“Dollars not spent to

cover fairly routine,

reasonably budgetable,

automobile collision

losses usually are

better spent to buy

higher limits of

business interruption or

professional liability

insurance—insurance

against the truly

catastrophic events

that, potentially but

very truly, can destroy

an organization, ending

its pursuit of its

mission.”

it might take an insurance adjusterweeks to come see our flat tire—threeweeks we couldn’t drive our car with theflat tire. It is just cheaper and easier topay these losses ourselves and save ourinsurance for the big things!

The same is true for organizations.It is a fact of nature that small losses,the “flat tires” of an organization’snormal activities, happen ratherfrequently in the overall scheme of anorganization’s life; the hard-to-foresee“head-on collisions” in the life-span ofan organization are really quite rare. Byrelying on insurance for only thesepotentially catastrophic events in anorganization’s life, we can cut downboth our organization’s insurancepremiums this year and,in the long run our totalcosts of paying—from ourown organization’spocket, or through trulyneeded insurance formajor, unforeseeablecasualties—for all thesetbacks our enterprisemay suffer. By choosingthe types and levels of thedeductibles in ourinsurance policies, we cancontrol how much wereduce our organization’scosts of the events we cantruly consider “major accidents” asopposed to prudently budgetable costs.

Encourage Loss ControlAnother way to make more costs of

“accidents” more predictable is toencourage safety as part of theorganization’s “way,” or “culture,” inperforming everyday activities.Emphasizing insurance deductibles to letmanagement and staff know that we allhave to “eat” the first dollars of mostotherwise-insured losses—and that thesedollars come out of a department’s orthe whole organization’s reportedfinancial results—can be a strongmotivator for safety, for everyone’s

personal “ownership” of the overallsafety record. For better safety to be aneffective motivator, it usually must bepresented as a positive reward for thegroup, not as a negative threat toindividuals so unfortunate as to havebeen involved in particular accidents.Focusing on financial results as affectedby choices of deductibles provides apositive, objectively impersonalframework for conveying this message.

Improve Allocation of InsuranceBudget

Insurance premiums and overall riskfinancing dollars that are saved bychoosing substantial deductibles ininsurance policies for controllableexposures become dollars that can beput to higher and better risk

management uses. Dollarsnot spent to cover fairlyroutine, reasonablybudgetable, automobilecollision losses usually arebetter spent to buy higherlimits of businessinterruption or professionalliability insurance—insurance against the trulycatastrophic events that,potentially but very truly,can destroy anorganization, ending itspursuit of its mission.

Once again, save theinsurance for the really big, otherwiseunmanageable, unforeseeable events inyour organization’s life. Love theadequate high limits of insurance youneed for the really rare occasions whenonly adequate policy limits can saveyour enterprise; and love the deductiblesfor helping you reach the decisionsthrough which you make the best use ofyour risk-financing and overall riskmanagement dollars.

George Head is Special Advisor to theNonprofit Risk Management Center. Hewelcomes calls and messages from readersof Community Risk Management andInsurance. Dr. Head can be reached at(610) 644-2100, x7108 [email protected].

Page 9: Stepping Around or Stepping Up?

9Community Risk Management & Insurance • May/June 2005

Now Available from the NonprofitRisk Management CenterRisk management text published by Wiley & Sons can be purchased from NRMC

Through a special arrangement with thepublisher, the Center is pleased to makeavailable Managing Risk inNonprofit Organizations: AComprehensive Guide for the specialprice of $20. Published by Wiley & Sonsin 2004, the authors of this hard-covertext include the Center’s executivedirector, Melanie Herman and specialadvisor, George Head.

oo often, nonprofit managersunwittingly adopt an unrealisticattitude toward risk

management. They acknowledge therisks inherent in the nonprofit’soperations—from serving a vulnerablepopulation while using volunteers todeliver services, to relying on thekindness of strangers for donations tomeet payroll and other expenses. Yettheir risk management strategy seeksonly to avoid or eliminate risk. Not onlydoes this stance fail to account for thefact that many risks in nonprofit workare plainly unavoidable, but it furtherfails to recognize the inherently positivecomponent of risk-taking. Anorganization that designs its riskmanagement activities solely around thegoal of minimizing or avoiding risk willmiss out on opportunities to strengthenthe organization’s assets, offer moremeaningful services to individuals or awider community, and attract a steadilygrowing constituency of donors,supporters, and volunteers. You’ll learnhow to minimize the negative andmaximize the positive consequences ofrisk-taking when you read Managing Riskin Nonprofit Organizations: AComprehensive Guide.

The authors of this book analyzeevery facet of the risk managementprocess, including identifying andprioritizing risk, selecting andimplementing risk managementtechniques, and monitoring risk

management for thelong term. They beginby highlighting fivereasons why riskmanagement shouldbe a top priority forall nonprofitpersonnel, from thegoverning board tounpaid volunteers:

Asset stewardshipAchieving publicaccountabilityAttractingstakeholdersFreeing up resources for missionStaying true to mission

The authors systematically explainhow risk management can be leveragedin a time-sensitive manner in each ofthese and other areas, recognizing themyriad pressures and competingconcerns that every nonprofit stafffaces. Diagrams of the riskmanagement cycle and “dimensions ofrisk” graphics further illustrate processimplementation.

Risk management should be viewednot as a bit of unpleasanthousekeeping, but rather as anopportunity to achieve yourorganization’s full potential. With thispractical guide, nonprofit managerswill learn how to reap the considerablebenefits that proper risk managementhas to offer.

2004 / ISBN - 0-471-23674-8 / 322pages / $20.00

To order a copy of this text, call (202)785-3891, visit www.nonprofitrisk.org,or use the order form on page 15.

T

Page 10: Stepping Around or Stepping Up?

10 Community Risk Management & Insurance • May/June 2005

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11Community Risk Management & Insurance • May/June 2005

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D&O, at Monitor Liability Managers, 2850 W. Golf

Rd., Ste. 800, Rolling Meadows, IL 60008-4039.

Phone 847.806.6590. Fax 847.806.6282.

http://www.monitorliability.com

(That’s us.)

MIN3AD21-O3105-2 (04-05)

Page 12: Stepping Around or Stepping Up?

12 Community Risk Management & Insurance • May/June 2005

Risk Management MARKETPLACE

Remember when closing your eyes and hanging on tight were all you needed

to feel secure?

800-253-3104www.markelsocialservice.com

Now that you run a social service agency, your eyes arewide open. Where others see only your good works, yousee that things can spin out of control. Markel sees thingsyour way, and can design an insurance program that protects your staff, clients, board members, and volunteers.

Feel secure with Markel.

Page 13: Stepping Around or Stepping Up?

13Community Risk Management & Insurance • May/June 2005

Risk Management MARKETPLACE

Education is when you read the fine print; experience is what you get when you don’t.

— PETE SEGER — Singer, Composer and Social Commentator

INSURANCE SPECIALISTSFOR NONPROFITS

Page 14: Stepping Around or Stepping Up?

14 Community Risk Management & Insurance • May/June 2005

Risk Management MARKETPLACE

(703) 777-2341www.ahtins.com

Web Seminar Schedule (2005/2006) and FacultyThere’s still time to register for upcoming programs in our series of monthly webinars. You can also purchase past

programs and download the audio and video portions of the program as well as handout material. For more information

about past or upcoming webinars, visit www.nonprofitrisk.org.

June 8 The Board’s Role in Risk Management (Melanie Herman)

July 6 Responding to Allegations of Abuse (John Patterson)

August 3 Insurance Basics for Nonprofits (Melanie Herman)

September 7 Contracting Do’s, Don’ts & Musts for Nonprofits (Melanie Herman)

October 5 Conducting Effective Performance Appraisals in a Nonprofit (Melanie Herman)

November 2 Staff Screening: What’s New and What You Need to Know (John Patterson)

December 7 Managing Transportation Risk in a Nonprofit (Melanie Herman)

January 4 Managing Legal Risks in a Nonprofit (Melanie Herman)

About the Faculty: Melanie Herman is executive director of the Nonprofit Risk Management Center. Melanie advises nonprofits ofall sizes on issues ranging from managing legal risks to employment practices to insurance buying. John Patterson is senior programdirector at the Center and a nationally known expert on youth protection issues, volunteer risk management and staff screening.

Have Expertise. Will Travel.Via Cyberspace to You.The Nonprofit Risk Management Center presents monthly Web seminars

Each Webinarcosts only $49.Save $$ whenyou register for 3or more!

Page 15: Stepping Around or Stepping Up?

15Community Risk Management & Insurance • May/June 2005

Shipping & Handling$1.50 for orders of $7.50 or less

$5.00 if subtotal is $7.51 - $25.00$7.00 if subtotal is $25.01 - $50.00

$10.00 if subtotal is $50.01 - $75.00$13.00 if subtotal is $75.01 - $100.00

Actual shipping cost will be billed for orders over $100.00,Next Day UPS, or 2nd Day UPS.

Telephone: (202) 785-3891; FAX: (202) 296-0349

Mail or fax this form with payment to:

1130 Seventeenth Street, NW, Suite 210Washington, DC 20036-4604

SUBTOTAL

Int’l Checks, please add $12.00

Shipping & Handling

TOTAL

Customer Information

Name

Title

Org

Address

City State Zip

Tel ( )

FAX ( )

E-mail

Method of Payment Check enclosed P.O. # ____________________ Charge my: Visa MasterCard AmEx

Card No. Exp. Date Signature

New Address!

New Address!

Call (202) 785-3891 to inquire aboutquantity discounts.

Order online atwww.nonprofitrisk.org

Visit www.nonprofitrisk.org for a complete description of allcurrent titles, including tables of contents. Also available: e-books—download our current titles and save shipping and handling costs.

*The Risk Management Essentials Series includes: Coverage, Claims &Consequences; Staff Screening Tool Kit; Pillars of Accountability; NoSurprises; Ready in Defense; Enlightened Risk Taking; and Vital Signs.

Products / Publications Order Form Price No. Total

NEW! Risk Management Essentials Series in a handy totebag* (free shipping!) $129.00

NEW! Pillars of Accountability: A Risk Management Guide for Nonprofit Boards $12.00

Managing Risk in Nonprofit Organizations: A Comprehensive Guide $20.00

Staff Screening Tool Kit—3rd Edition $30.00

No Surprises: Harmonizing Risk and Reward in Volunteer Management—3rd Edition $15.00

The Season of Hope: A Risk Management Guide for Youth-Serving Nonprofits $30.00

Managing Facility Risk: 10 Steps to Safety $15.00

Playing to Win: A Risk Management Guide for Nonprofit Sports & Recreation Programs $20.00

Ready in Defense: A Liability, Litigation and Legal Guide for Nonprofits $20.00

A Golden Opportunity: Managing the Risks of Service to Seniors $20.00

Enlightened Risk Taking: A Guide to Strategic Risk Management for Nonprofits $25.00

Enlightened Risk Taking: The Workbook $15.00

Nonprofit CARESTM –Version 2.0—Computer Assisted Risk Evaluation System (visit www.nonprofitcares.org to order!)

Coverage, Claims & Consequences: An Insurance Handbook for Nonprofits $30.00

Vital Signs: Anticipating, Preventing and Surviving a Crisis in a Nonprofit $20.00

Full Speed Ahead: Managing Technology Risk in the Nonprofit World $25.00

Taking the High Road: A Guide to Effective and Legal Employment Practices for Nonprofits $45.00

No Strings Attached: Untangling the Risks of Fundraising & Collaboration $15.00

Managing Special Event Risks: 10 Steps to Safety $12.00

Page 16: Stepping Around or Stepping Up?

Prepared for distribution to:Big Brothers Big Sisters of AmericaBoy Scouts of AmericaCalifornia Association of NonprofitsChild Welfare League of AmericaCouncil of Community Services of New York State, Inc.Delaware Association of Nonprofit AgenciesGeorgia Center for NonprofitsKansas Non Profit AssociationLaubach LiteracyMaine Association of NonprofitsMichigan League for Human ServicesMichigan Nonprofit AssociationMinnesota Council of NonprofitsNorth Carolina Center for NonprofitsOhio 4-H Youth DevelopmentPresbyterian Church USAPro Bono PartnershipUnited Way of Central IndianaYMCA Services Corporation

Please route to:

Executive DirectorDirector of VolunteersRisk ManagerLegal CounselHuman ResourcesFinance/Administration

1130 Seventeenth Street, NW, Suite 210Washington, DC 20036-4604

Inside This Issue

Stepping Around or Stepping Up? .............................................................................................. 1

Love Those Deductibles! .............................................................................................................. 5

Risk Management Marketplace..................................................................................................10

Publications from the Nonprofit Risk Management Center ..................................................15


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