Having the right insurance cover
Charities know better than most how the unexpected can derail everything. As organisations that are often turned to in times of upheaval, it\'s crucial that charities themselves are also well protected against shocks which could threaten either their future plans or their ability to deliver vital services in the here and now.
Amidst a volatile and unpredictable global landscape, it\'s more important than ever for charities to anticipate challenges and build resilience strategies, but it is inevitable they have to do this within limited budgets. Insurance has a critical role to play in helping tread this tightrope successfully.
The range of risks faced by charities is complex and can vary depending on the nature of the services offered. They must comply with specific regulations, which may differ by country or region, and standard business insurance is unlikely to address the specific needs of charities, such as cover for trustees or fundraising events.
Increasing exposure
Charities often engage with the general public, increasing their exposure to public liability claims, while also depending on the public in the form of volunteers to keep their operations running. Protections relating to paid staff, such as employers' liability cover, need to be in place for volunteers but will likely have to be arranged under separate cover.
There are several broader risks which are much more prominent now than ten years ago and these have implications for charities as much as any other organisation. The rise of technology means there's been wide adoption of digital tools to help increase efficiency and improve communication, which in turn increases cyber risk. Cyber crime is constantly evolving and has the potential to be crippling. The use of AI also comes with data security risks and the potential spreading of misinformation creates a reputational hazard.
Climate change isn't a theoretical danger but is increasingly making itself felt in the world around us. With extreme weather events becoming more frequent, charities can expect to be called upon more often to support those affected. It is imperative for charities to consider how their own operations and premises need to be future-proofed against climate change; a challenge major companies are also grappling with but with much greater resources to draw upon.
Risk assessments
Reducing and managing these risks is something charities should tackle in partnership with their insurer or broker. It's important for all charities to properly assess their risk register, to make sure it's up to date and still relevant for their activities.
Plotting strategic and operational risks separately and really understanding them helps to shape the insurance provision which is needed. It's worth updating risk assessments regularly, since short, sharp conversations can better ensure risk identification and accommodate management time constraints while less regular conversations will take longer and feel more onerous.
There is free, high-quality guidance available online to support charities with horizon scanning for future risks. One example is the annual Road Ahead report from the National Council for Voluntary Organisations (NCVO). This report is committed to providing a practical overview of key trends affecting the voluntary sector and to giving support with risk and resilience planning.
Charities can also build resilience through their day-to-day activities. While it can be tempting to become very internally focused at times of volatility and threat, these moments can actually present good opportunities to build relationships with partners and stakeholders, finding areas of mutual benefit for collaboration. This is also the time to maximise the power of suppliers and turn those relationships into partnerships wherever possible.
Training and development
No one should underestimate the importance of training and development in building resilience. A skilled and knowledgeable team is more adaptable and better equipped to handle change. Effective governance and leadership provide oversight, keep charities and their communities safe, and enable informed decision making to navigate challenges.
Training and skills development doesn't have to be costly. Free webinars and courses are available via platforms such as LinkedIn, and team members will also benefit from shadowing senior colleagues and taking on project opportunities. Businesses in all areas will likely be looking for corporate volunteering opportunities so it's worth asking them to do some skills-based volunteering, using their resilience experts to run a training or workshop session.
There's also no substitute for preparation. Drawing up crisis management plans for various scenarios which could impact a charity, whether that's a severe weather event or a reputational issue, should mean being better placed to minimise disruption should the worst happen. Having the outline in place means being able to focus more quickly on the things that truly matter, enabling quicker response and recovery.
Managing tight budgets
The challenges of managing a tight budget hang over everything that charities do and it is inevitable that cost is a factor when decisions are being made about insurance cover. However, when it comes to risk and insurance management, scaling back can be a false economy which leaves charities vulnerable to shocks which can impact the essential frontline services they provide.
Instead, charities should ensure they are maximising the value of everything that comes with their insurance. Fewer insurance firms specialise in the charity sector but it is worth using their expertise to ensure the full range of issues is being considered, and to get cover which is bespoke for a charity when appropriate. It is important that insurance can bring value beyond just the financial cover for a claim, offering packages which include training, rehab support and counselling for example.
Cutting corners can lead to under insurance, leaving charities with cover which doesn't fully protect all of their assets and activities. In these instances, the pay out for a claim may not fully cover the loss or damage which has been incurred, leaving the charity exposed. Aside from the financial impact, this can make it harder for charities to maintain all their services, while not meeting insurance requirements can even lead to fines or loss of charitable status.
Sheer complexity
Under insurance can arise because of attempts to cut costs, or because the sheer complexity of a charity's operations means some risks are overlooked. Charities may not have staff with insurance knowledge, leading to gaps or misunderstandings about what's needed, and assets such as donated goods, specialist equipment or historic buildings may be undervalued. Things also change over time, and new projects or updates to regulation can mean existing cover is no longer adequate if not reviewed regularly.
Charities should be looking for an insurance firm which works in partnership with them to help navigate and overcome all this complexity. Professional guidance should help avoid the risk of under insurance, with cover reviewed at least annually or after any major change.
Where possible, factor in plans for potential new services or future expansion when setting cover levels, and it's wise to take time to check the detail of a policy to understand any exclusions and conditions. Effort spent becoming familiar with the details when a policy is taken out can help save valuable time during a challenging period should a claim be necessary.
The right insurance cover is a cornerstone for the sustainability and resilience of charities. A tailored insurance policy not only protects a charity's assets and people but also strengthens its reputation and helps maintain public trust.
Ultimately, insurance is more than a safety net. It's an investment in the future of the charity, its beneficiaries and the wider community. It enables charities to navigate uncertainty, recover from setbacks, and continue their important work with confidence. It empowers supporters, staff and those they serve.
