Most trustees and leaders within charities, social enterprises and faith-based organisations understand the importance of insurance. When you’re responsible for safeguarding the assets of an organisation, insurance may seem like the go-to solution. But have you really thought about your risk management? Because insurers (and the Charity Commission) expect you to.
Insurance is a tool for risk management and provides security in the event of a loss. The insurer agrees to provide certain compensation as detailed in the policy, provided the insured adheres to any terms and conditions. Simply put, if a particular risk occurs, and you’re insured for it, your insurer will make good up to the agreed limits.
However, it is not the only tool for managing risk.
Good risk management involves identifying, understanding and addressing risk. This is a vital function in any organisation, including charities, voluntary organisations, social enterprises and faith based organisations. For charities, it’s the trustees’ responsibility to safeguard funds and assets and, as such, to review and assess the risks faced by their organisation and to manage those risks appropriately.
Insurance is just one tool for controlling the financial impact of something going wrong. It is not a replacement for risk management. In fact, good risk management is a sign of a well-managed organisation, which is what insurers look for when you approach them for insurance.
You can use our guide to risk management, part of our new, online and free Support Centre, to find out more about how this can work for your organisation. In summary, you need to identify and record risks and plan how you’re going to reduce the impact or likelihood of them occurring; use this information to make contingency (business continuity) plans and, finally, identify the gaps in your risk management that may require insurance to protect your organisation.
Not sure how this applies to you? Or need some risk management or insurance advice? Contact our team today.