Risk Management Strategies


Financial Management and Accounting

Risk Management


Risk exists in two major forms:

1. The possibility for loss of, or damage to, assets, and

2. Potential liability for the actions (or inaction) of directors, managers, employees and volunteers.


Checklist for Risk Areas


The assistive technology re-use organization will be exposed to risk and potential liability in the same manner as for-profit companies.


Potential loss of assets to fire, flood, theft or earthquake damage to:

Building owned by the organization Furniture and fixtures owned by the organization Computers owned by the organization Donated devices in inventory Supplies and spare parts on hand Records

Liability for injuries to employees

Employees injured in the workplace

General liability for bodily injury or property damage arising from operations:

Fire in a leased building caused by employee or volunteer negligence Medical coverage for injuries sustained by non-employees on the premises Protection from lawsuits related to the distribution of AT devices

Liability for damage and/or injury caused by automobiles owned or leased by the organization

Physical damage to vehicle Medical payments for injuries

Liability for fines and penalties for noncompliance with federal laws:

Nondiscrimination in hiring Compliance with workplace safety regulations Appropriate disposal of hazardous waste Protection for workers who report waste, fraud or abuse Appropriate archival and retention of documents

Protecting the Organization against Risk


Risk cannot be eliminated from any operation, whether for-profit or nonprofit, but it can be mitigated by two effective strategies.


Strategy 1: Devise good policies and procedures and train employees to follow them.


The first strategy to lessen risk is the implementation of sound policies and procedures in all functions of the organization. This includes everything from appropriate safety practices to secure money-handling. Organizations that devise policies and procedures for compliance with legal and safety requirements, and train their employees to follow those policies and procedures, are less likely to suffer workplace accidents or have lawsuits brought against them.


Some examples of areas where appropriate policies and procedures lessen the risk from injury or litigation are:

Employment recruitment and hiring: compliance with non-discrimination laws Workplace safety practices: compliance with regulations from the Occupational Safety and Health Administration (OSHA), the Environmental Protection Agency (EPA) and local fire and safety ordinances Financial management: compliance with Generally Accepted Accounting Principles (GAAP) User Services: compliance with the privacy standards set forth in the Health Insurance Portability and Accountability Act (HIPAA)

Strategy 2: Insure against the most likely or costly liabilities.


Risk can also be diminished by purchasing insurance coverage for those areas that represent the greatest, or most likely, liabilities to the organization. However, insurance is not available to cover illegal acts such as employee discrimination, libel or slander, or other criminal acts.


The cost of insurance must be balanced against the probability of need and the impact that the potential loss or liability would have on the ability of the organization to continue successful operations. The administrators should audit the organization’s areas of risk – perhaps with the assistance of a risk or insurance professional – and determine the kind of coverage that is most appropriate to the circumstances.


Some insurance is mandatory. Worker compensation insurance is administered at the state level and is not optional. In most states, automobile insurance is required on all owned vehicles.


The types and amounts of coverage purchased to cover losses from natural disaster, crime, or acts by directors, managers, employees and volunteers should be evaluated.



  An excellent explanation of all types of insurance coverage is available at

Most states have an association of nonprofit organizations that provide resources, training and sometimes insurance opportunities. [See the list attached to the Resources for Nonprofit Organizations article.]


LINK WARNING Please note that by selecting an Internet link you will be directed to an external site, and the Pass It on Center does not control the content of the site.


DISCLAIMER This work is supported under a five-year cooperative agreement # H235V060016 awarded by the U.S. Department of Education, Office of Special Education and Rehabilitative Services, and is administered by the Pass It On Center of the Georgia Department of Labor – Tools for Life.  However, the contents of this publication do not necessarily represent the policy or opinions of the Department of Education, or the Georgia Department of Labor, and you should not assume endorsements of this document by the Federal government or the Georgia Department of Labor.


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Other Information

Title: Risk Management Strategies
Module: Finance/Accounting
Author: Trish Redmon
Audience: Administrator
Sub Title: Policies, Procedures and Insurance
Organization Source: Pass It On Center
Last Reviewed: 08-27-2009 8:34 AM