Risk issues and case studies

Understanding your sector is what makes effective charity insurance tick

The voluntary sector landscape has changed significantly over the last five years – as have the charity insurance and risk management solutions that go with it. Let’s take a look under the bonnet …

  • A greater reliance on volunteers over payroll employees in some areas has become a more cost-effective way to operate. While lowering operating costs on one hand, this also creates ‘grey’ risk areas over what constitutes an employee and the duties of care a charitable organisation must provide.
  • No surprise then that we continue to see a high incidence of employment disputes with compensation claims that impact on management time as well as increase costs.
  • Growth in cyber risk and online fraud can impact both income levels and reputation – plus certified protection for not-for-profit groups working with government is likely to become mandatory.
  • Donation and legacies continue to be erratic due to recent economic circumstances. People’s willingness to volunteer can also be impacted by economic pressures and other external influences.
  • Third party and employee fraud has risen too, often due to weaknesses in digital processes and protection. Sometimes these are opportunist, sometimes organised, we’ve seen it range from rogue trustees or officers and temporary workers to volunteers too.
  • The speed and growth of social media and a constant broadcast news cycle can put your organisation and its reputation under the spotlight in an instant. Whether claims are warranted or mischievous, they can have a lasting impact.
  • Where charities have supply chains, identifying labour abuse and slavery is enshrined in the new Modern Slavery Act 2015: with unlimited fines, Ignorance of the law is not a defence.
  • Contract management and outsourcing can be a problem area; better in-house charity insurance control is needed and mitigation by specialist voluntary sector insurance solutions should not be overlooked.

Our judgment is that the voluntary sector is generally risk-aware but there can still be a disconnection between thorough risk assessment and implementing effective charity insurance programmes. There’s much we can do to help you navigate these uncertain waters.

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