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Associations operate in a world of continuing uncertainty, and no amount of planning will surface every issue that could impair the organization’s goals and strategies. Nevertheless, here’s a short list of possibilities and related risk management advice:
An increase in employment claims. According to one prominent director & officer carrier, claims alleging wrongful termination are on the rise for nonprofit organizations, while claims against for-profits have begun to subside. Association leaders can prepare for new claims by asking:
– Does our treatment of paid staff line-up with our written employment policies?
– Do we treat departing employees (regardless of the reason) with compassion and respect?
Costlier liability insurance. The unprecedented “soft market,” marked by relatively low prices, broad coverage and carrier competition for your business, will finally shift in 2013 and many association buyers will feel the pinch of a hardening insurance market. Two tips to prepare:
– Make certain your agent or broker enjoys access to multiple markets for all lines of coverage. If your broker only has “one market” for D&O, professional liability, crime coverage or other property and casualty coverages, you will be out of luck if that carrier refuses to renew your association’s policy.
– If you’re not satisfied with the services you’re receiving from your agent or broker, consider conducting a “broker beauty contest” and invite competing association specialists to submit proposals to serve as your insurance adviser.
A narrow view of risk. If the word “risk” brings operational issues to mind, it’s time to broaden your perspective. The top risks facing your association are likely to be related to your strategies and reputation. To ensure a broad perspective:
– Add a discussion of risk issues to the agenda of an upcoming board meeting. To help the board focus on the positive and negative aspects of risk-taking, pose the following question: What big risks should we take in 2013 to advance our mission?
– Reflect on the length of time since you conducted a risk assessment. If it has been more than five years, consider conducting one soon. The process can be led by an internal team, or guided by an independent consultant.
Herman is executive director of the Nonprofit Risk Management Center. Contact her at Melanie@nonprofitrisk.org.