June 21, 2013
Media liability, network security and cyber threats are all top concerns for U.S. nonprofits, and having the right insurance policies is imperative if the organization wants to remain protected from the number of risks they face on a daily basis. However, according to new research from insurance brokerage Crystal & Company, managing potential issues that can flare up at nonprofits is not getting the attention it deserves.
The study showed only 22 percent of nonprofits have a full-time risk manager, while 7 percent have never conducted an independent assessment of their corporate risk and insurance program and just 36 percent have taken the time to go over the potential threats they have faced in the past year. Organizations need to do a better job of looking at potential issues that can cause a roadblock in the upcoming weeks, as well as six months to a year down the road.
"For a nonprofit organization, risk management is paramount because it's crucial that this sector protects its operations, personnel and reputation as complex risks continue to evolve," said John Smith, executive vice president at Crystal & Company.
Nonprofits need better protection
While about 8 in 10 nonprofits that took part in the study have looked at their inherent risks and how their insurance protections can defend them, the research revealed a majority of respondents are spending less than 0.25 percent of annual revenue on corporate insurance. Insurance companies typically believe that number should be in the ballpark of 1 percent. By spending more on coverage, the organization can stay protected from risks that it may not currently anticipate.
"Our research showed that small nonprofit organizations are arranging only the most basic forms of insurance, not necessarily those that will be vital as they grow," said Jamie Crystal, executive vice president at Crystal & Company.
Figure out the right ways to insure the nonprofit
Nonprofits with the necessary insurance and the right policies will have a lot more time to focus on bringing in funds and will be able to worry less about the inherent risks it faces. Here are some tips from the Nonprofit Risk Management Center on how to buy insurance:
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