Not for profit organisations perform immensely valuable social services for people in need including the vulnerable or disabled in our communities — who may be already at risk when they come into contact with the support agency. As vital service providers in this context it's even more important that not for profits (NFPs) have an effective risk management framework as part of their organisational structure.

Risk exposures can arise from providing care, using volunteers, hosting events or operating support services for areas related to potential criminal activity such drug addiction recovery. Negative incidents can result in legal actions and expenses, potentially involving individuals in your organisation, detract from core activities and engender reputational damage.

While insurance has an important role to play in NFP risk management, proactive preventative measures can contribute to containing costs and limiting insurance premium levels.

NFPs'legal and regulatory obligations are fundamental

A critical focus for NFPs is the organisations' knowledge and compliance with fundamental legal and regulatory obligations. Keeping a register that lists the national, state and international legislation/s that affects your NFP's work can help to identify the jurisdiction and source of the obligation, as well as recording how compliance is achieved.

For those delivering disability support the National Standards for Disability Services requires service providers to have preventative measures in place to ensure people receiving services are free from discrimination, exploitation, abuse, harm, neglect and violence.

5 steps to creating an NFP risk management framework

Developing a comprehensive NFP risk management plan to embed best practice measures should involve people from all levels of your organisation participating with their perspectives and ideas based on practical experience. It's a good idea to start with these 5 steps below.

  1. Conduct assessments to identify potential risks
  2. Evaluate how identified risks can affect your organisation
  3. Develop solutions to control those risks
  4. Implement the best solutions to address the identified risks
  5. Monitor for effectiveness.

What are the common solutions for managing NFP risks?

Once you have identified potential risks and how they might impact your organisation these can be addressed with proactive and preventative measures which might typically include the below.

  • Setting out in writing the policies and procedures as a guide for staff in your organisation to refer to
  • Implementing training and education sessions that explain why these protocols are in place and how they contribute to reducing risks
  • Establishing a safety committee and encouraging staff to participate. You could do this by putting it on a revolving panel basis
  • Transfer risks where you can. Insurance isn't the only means of doing this: if you're hiring a vendor transfer the risks involved to them via a written agreement. If you have volunteers and/or participants in a program you're offering, have them sign a liability waiver
  • Be prepared if an incident occurs by having a response plan that includes identified risks and outlines next steps. It's also a good idea to have an investigation process to help identify and avoid contributing factors to the incident
  • If you own buildings, conduct regular chazard identification inspections, and document and follow a preventive maintenance plan.

Access help to tackle NFP risk management

Most not for profits operate with limited resources, but there are tools and advice that don't involve additional costs available to assist with creating a risk management framework. The Australian and Not for Profits Commission provides useful downloadable templates for formulating risk management policies to suit a range of NFP services, as well as information resources to assist with formulating solutions.

Our Gallagher broking NFP insurance specialists can advise on risk identification — arranging professional analysis if required — and provide guidance on management strategies, as well as alerting you to any gap exposures that may have been overlooked and proposing insurance and risk solutions.

Our care and not-for-profit insurance specialists get to know your business so that they can offer the right insurance cover for you and our priority claims service is there when you need it must.


Gallagher provides insurance, risk management and benefits consulting services for clients in response to both known and unknown risk exposures. When providing analysis and recommendations regarding potential insurance coverage, potential claims and/or operational strategy in response to national emergencies (including health crises), we do so from an insurance and/or risk management perspective, and offer broad information about risk mitigation, loss control strategy and potential claim exposures. We have prepared this commentary and other news alerts for general information purposes only and the material is not intended to be, nor should it be interpreted as, legal or client-specific risk management advice. General insurance descriptions contained herein do not include complete insurance policy definitions, terms and/or conditions, and should not be relied on for coverage interpretation. The information may not include current governmental or insurance developments, is provided without knowledge of the individual recipient's industry or specific business or coverage circumstances, and in no way reflects or promises to provide insurance coverage outcomes that only insurance carriers' control.

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