No business owner wants to use their risk management protection if they don’t have to. But if you operate a nonprofit organization in Hawaiʻi, you know that natural disasters, economic changes, or financial mistakes can strike when least expected. Having non-profit insurance and never needing it is far better for business than not having it when you need it most.
Your risk management strategy should be tailored for your business to protect your assets from costly events and mistakes withoutoverpaying for coverage you don’t need. Many business owners in Hawaiʻi find this difficult to tackle alone, especially those unfamiliar with how their unique risk profile compares to the insurance options available.
We’ve compiled some of the basic risk management strategies that every non-profit needs to know.
1. Identify Common Risk Factors
Identifying common risk factors in your industry will help your business set an appropriate tolerance level for risk. Your risk profile depends on your business’s asset value and location. Start with a self-review to evaluate the types of risks associated with your specific business. You can then make a list of these risks and compare them to available insurance offerings to make sure you aren’t leaving any coverage gaps.
2. Evaluate Theft Protection
All businesses face the threat of financial and property theft, but special consideration should be paid to this protection if you operate a nonprofit. Despite their tax status, nonprofits handle a lot of money and resources that should have appropriate general and financial liability coverage. They also have assets that need to be protected by commercial property insurance.
Your organization might recruit volunteers to help with operations, motivating scammers to perceive your nonprofit as less secure compared to a traditional business. In the absence of a fully employed staff, they will assume volunteer personnel are less likely to be properly trained in identifying and preventing theft. Another common assumption of nonprofits is that their security systems are outdated. In many cases, they are right about both.
So, how can your nonprofit manage this risk? Identify and track personnel who have access to information and financial resources in order to secure key individuals and prevent an incident. Stronger employee background checks for key personnel can help you determine their level of access to resources and possibly minimize your risk of theft.
3. Assess Cybersecurity Needs
Nonprofit institutions have to worry about cybersecurity risks to the same degree as any other business. In today’s world, your business likely relies on an online network in some capacity. Identify your risk level for cyber theft based on the types of data your business handles, the age of your current system, data storage, and more.
Nonprofits may not process transactions in the same ways as a traditional business, but they store the names, addresses, and payment information of donors. These donors represent a gold mine for potential cyber thieves, who will attempt to breach a nonprofit’s data systems by exploiting outdated or insufficient security measures.
Consider investing in protections that safeguard valuable donors. These precautions include:
- CRM data protection
- Updated donation processing vendor
- Financial system monitoring
- Full account surveillance
- Limited staff access
This process can be difficult to handle internally, which is why nonprofit businesses seek the help of experienced insurance vendors to identify their cybersecurity risk factors and match their needs to appropriate cyber insurance.
Cyber insurance protects nonprofit organizations from liabilities related to their digital assets. You may be able to reduce your premiums by deploying the safeguards listed above, which can make your nonprofit organization a safer investment for insurers.
4. Identify Legal Risks
Nonprofit organizations face legal risks similar to other businesses, including fraud. Scammers who obtain employee identification can impersonate your organization to steal from potential donors. If this happens, you must report the fraud to the FTC, but the financial and reputational damage may already be done.
That’s where a comprehensive insurance policy becomes invaluable, providing the protection your organization needs to recover. Fraud is just one of many legal risks non-profits in Hawaiʻi must navigate.
Maintaining tax-exempt status requires strict compliance with local regulations, and any violations can result in significant financial penalties. Integrating nonprofit compliance into your risk management strategy is essential. The right insurance policies should not only cover known risks but also offer the flexibility to address unforeseen challenges.
Contact Atlas Insurance to Mitigate Risk in Your NonProfit Business
These basic tips can help you prepare your nonprofit to reduce risks in the coming year. Working with a local insurance agency experienced with nonprofit businesses in Hawaiʻi can expertly apply these risk management strategies to specific situations.
At Atlas Insurance, we build on nearly 100 years of experience helping local businesses reduce their risk profiles. Contact our team today to learn how your non-profit business can identify its risk factors to get the nonprofit insurance that matches your needs.