Risk management for charities

06 June 2018

Protecting the reputation of your charity clients.

A charity is under greater scrutiny than any other organisation. Reputation is everything, but, unlike private sector businesses, once tarnished a charity’s reputation is rarely recovered.

Why your clients may need risk management advice

Reputation and public trust are all-important for any not-for-profit organisation, as several high-profile charities have discovered to their cost in recent years. How can your charity clients avoid succumbing to the threat of reputational risk?
While risk management is a core function in any credible commercial business organisation, many charities have not prioritised this sensible and vital self-protection until it was too late to avoid reputational damage. For example, this could happen because of improper employee practices, data loss, poor financial controls or injuries in situations for which that the charity is found liable.
When it comes to charity risks, prevention is better than cure – understanding how to manage risk before the event is always preferable to recovering after a serious issue has taken place.

A responsible approach to charity risk

The Charity Commission advises charity trustees to set a risk framework that allows them to identify the major risks that apply to their charity; to make decisions about how to respond to the risks they face; and to make an appropriate statement regarding risk management in their annual report.
Risk management must become an everyday 'way of life' for every charity worker

The Charity Commission

One challenge is a widespread feeling among charity employees and volunteers that risk management is a high-level function, best left to senior management and trustees. While appropriate leadership is necessary, a change of mind-set by all employees is required to ensure that risk management becomes an everyday ‘way of life’ for every charity worker.
The Institute of Risk Management says that effective risk management involves an on-going cycle of assessment, treatment, monitoring and review – though the frequency and timing of these processes will vary according to the size and complexity of the charity, as well as the changing landscape in which it operates.

Challenges of risk in charity organisations

Charities say they are largely aware of their responsibilities, with 92%1 involving trustees in risk management procedures. But translating awareness into tangible action can be poor – with 76%1 of charities saying they don’t offer in-house risk management training due to lack of expertise or resources.
This is an area where a partnership between you, your charity clients and Ecclesiastical can prove beneficial, as we can help charities understand the risks inherent in their operations – and how to manage them effectively. Ecclesiastical’s charity insurance experts are all experienced in working with our broker partners to help your clients develop a better approach to risk.
This trilateral relationship brings mutual benefit to charity, insurer and broker. The charity is more likely to avoid reputational damage while the insurer potentially gains or retains a charity policyholder with a better-managed risk profile. 75%1 of charities obtain insurance via a broker, valuing the added service and support they receive. By providing value-added advice in association with Ecclesiastical, your brokerage is more likely to retain the loyalty of your charity clients.

How we can help with risk management

The support that we offer to your clients offers more than just expert business resilience advice for trustees. We also advise charities on how to manage risks for employees, volunteers and supporters; how to plan events more safely; and how to assess risks at sites for which charities may be responsible.
As Ecclesiastical’s charity insurance director David Britton recently told Insurance Age: “It’s about understanding the sector and then speaking their language and understanding their risks. At Ecclesiastical we invest the time in listening to the customer needs. It’s really important in the charity sector because, typically they’re not professional risk managers, so there has to be a lot more hand holding at times than there would be for general commercial insurance customers. It’s one of those things is never going to be a quick one-size-fits-all.”
With our expert and personal approach to cover and advice, Ecclesiastical aims to find the perfect fit for each of your charity clients – and help them better manage risk in a complex and changing landscape.
1Source: Third Sector Insight: Charity Trustees & Risk Management, 2016.