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Risk Management and Insurance by niusheng11


									                                                                                           Information Sheet
                                                                           Risk Management and Insurance

    Why Use this Resource?
                                             What is Risk Management?
    Risk management is the process of        Risk management is the process of systematically identifying and eliminating or
    systematically identifying and           reducing risks faced by voluntary organisations so as to protect the interests of
    eliminating or reducing risks faced by   the organisation and to protect those who may suffer injury, damage or loss.
    voluntary organisations so as to         Effective risk management depends on the development and implementation of
                                             risk management policies and strategies, which have the full support and
    protect the interests of the
                                             commitment of the organisational hierarchy. Implementation is most effective
    organisation and to protect those who    when all staff and volunteers have an awareness of and commitment to risk
    may suffer injury, damage or loss.       management.

        Links to National Standards for      Over recent years there has been increasing concern regarding the legal risks
      Involving Volunteers - No. 4 Work      faced by volunteers and organisations that involve volunteers. Specific areas of
                    and the Workplace]       concern have included work with children and other vulnerable clients, and an
                                             organisation’s responsibility for volunteers acting both within and outside their
                                             areas of voluntary responsibility. These issues highlight the importance of
                                             voluntary organisations having in place proper selection, training and supervision
                                             for volunteers as part of a comprehensive risk management program.
                                             Questions to assist develop an organisational policy on risk management:
                                                • What is the mission of our risk management policy?
                                                • How can risk management contribute to the overall mission of the
                                                • What actions can staff and volunteers regularly take to manage risk?
                                                • How will risk management be coordinated and by who?

                                             Risk Management Model
                                             Risk management involves four stages:

                                             Risk Identification
                                             The intent is to identify all the things that may go wrong in the volunteer program.
                                             This information should be gathered through the involvement of staff and
                                             volunteers familiar with the details of the organisation’s volunteer programs.

                                             Questions to assist risk identification:
                                                • What are possible dangers or hazards in the operation of the program?
                                                • Where do the organisation’s liabilities rest?
                                                • What situations pose potential dangers?
                                                • What equipment, locations are used in the work of volunteers?
                                                • What problems have staff and volunteers faced in doing their work for the
                                                    organisation in the past?
                                                • What accidents, injuries or illness have occurred to those involved in the
                                                • What risks have similar programs identified?
                                                • Who does the organisation deal with and come into contact with during its
                                                • What is the organisation’s legal environment?
                                                • What state, federal legislation applies to the organisation and its
                                             Risk Evaluation
                                             Once potential risks are identified then for each, the likelihood of
                                             occurrence and the severity of impact if they do occur is
                                             established. Risks can then be prioritised so they can be
                                             dealt with.


                                                        Volunteering has never been so easy
                                                      Information Sheet
                                      Risk Management and Insurance

        Questions to assist risk evaluation:
           • What is the likelihood of an identified risk occurring?
           • What would the severity of the event be if it did occur?
           • What would be the costs? (including legal costs and cost to reputation).
        Risk Control
        Appropriate strategies for the management of identified risks are determined and
        implemented based on the risk evaluation. A range of management options would
            •   Avoid the risk. Stop the activity or delay the activity until adequate
                preparation had been undertaken for the activity to be conducted safely.
                E.g. no lift policy in nursing home.
            •   Minimise the risk. Changing operations to reduce the likelihood of the
                risk occurring. E.g. amending volunteer selection, training and supervision.
            •   Minimise harm from events. Putting strategies in place that minimise the
                severity of any harm if the risk does occur. Eg. Well rehearsed emergency
                procedures in place to cope with disasters.
            •   Transfer liability. Moving the consequences of the risk to another party
                usually through insurance or through transfer of control of responsibility
                with another party contracted to perform a particularly risky activity or
                through an agreement exempting the organisation from liability. E.g.
                volunteer insurance policy or organising for professional security to be in
                place at a doorknock collections centre.
        Consideration needs to be given to who in the organisation will take responsibility
        for the implementation of strategies. In the most successful situation risk
        management becomes part of the organisational culture.

        Review and Updating
        Continuous review and amendment are used to keep up with any changes and to
        make the organisations activities progressively safer.

        Insurance enables an organisation to transfer specific risks to an insurer.
        Adequate and appropriate insurance for volunteers is essential for all community-
        based organisations and makes up one part of the organisation’s risk
        management strategy. Insurance should provide adequate coverage so
        volunteers are not at personal financial risk should some accident or other incident
        arise resulting in a damages claim. Similarly appropriate insurance would provide
        coverage for the entire volunteer workforce your organisation engages and for all
        the roles they are involved in.
        Volunteer insurance covering three types of situation should be considered by
        organisations involving volunteers:

        •   Personal accident insurance. Applies where a volunteer is injured or dies as
            a result of an accident while they are volunteering or while travelling to or from
            their voluntary work. Volunteers are not generally covered by workers’
            compensation schemes that are compulsory for paid workers in each state.
            Thus personal accident insurance is necessary to cover volunteers for costs
            resulting from such accidents. Coverage may include - death, disability both
            permanent and temporary, loss of income, home assistance,
            assistance with tutoring, carer support and non-medical
            expenses. Coverage varies from policy to policy.


                   Volunteering has never been so easy
                                                      Information Sheet
                                      Risk Management and Insurance

        •   Public liability insurance. Protects volunteers and the organisation should
            someone else be injured or their property damaged as a result of an accident
            caused by a volunteer undertaking their role for the organisation.
        •   Professional indemnity insurance. Protects volunteers and the organisation
            in the case that information or advice that is given by a volunteer is incorrect.

        Other Insurance Issues for Consideration
        Age of Volunteers Covered by Insurance
        Many off the shelf insurance policies have minimum and maximum age limits for
        volunteers covered by the policy. Ensure the organisation’s insurance policy is
        appropriate to the ages of volunteers involved with the organisation. An
        organisation may need to arrange extensions to cover the ages of its volunteers.
        Monitor over time to ensure coverage remains suitable.
        Professionals as Volunteers
        If the organisation involves professionals as volunteers in their field of expertise
        ensure responsibility for insurance is clear and implemented.
        Volunteers Recruited Through an Education Institution, Employee Volunteer
        Program or Other Institution
        Establish adequate insurance coverage is available either through your
        organisation or the referring body.

        Directors and Officers Insurance
        Protects the members of your board of directors and the company against claims
        for breach of fiduciary responsibility, or actions resulting in financial loss to the
        organisation. Insurance of the organisation as a whole is only available to
        incorporated organisations, without incorporation insurance must be taken out by

        Communication and Accessibility of Insurance
        Ensure volunteers know or can easily access the details of insurance coverage
        available through the organisation and how to access it if necessary.

        Motor Vehicles
        Some organisations adopt a policy whereby volunteers do not use their own cars
        when undertaking work on behalf of the organisation or when transporting clients
        of the organisation. This decision is made as part of the organisation’s risk
        management strategy.
        In many organisations however volunteers take on roles that involve them driving
        their own vehicles while undertaking work for the organisation. In some
        organisations volunteers drive their own vehicles to transport clients of the
        services. Where volunteers drive their own vehicle in their work for the
        organisation insurance available to the volunteer to cover their vehicle should be
        clarified by the organisation.
        Options an organisation may consider include:
            • Provide insurance that covers the vehicle and driver during voluntary
            • Require drivers verify they have comprehensive insurance for the vehicle
                as part of the selection criteria for a driving role.
            • Advise volunteers to check with their insurer whether their insurance
                covers or is affected by the car being used for voluntary
                work purposes.
            • Determine that no volunteers will use their own
                vehicles when driving for the organisation.


                   Volunteering has never been so easy
                                                       Information Sheet
                                       Risk Management and Insurance

        Group Plans for Liability Insurance
        A group of non-profit associations with a common thread such as similar activities,
        funding or location join together to obtain a master policy. Group plans reduce
        individual premiums and permit policies to be custom-made to meet the needs of
        the organisations involved.
        Insurance is a part of and no substitute for a comprehensive risk
        management strategy.

        Are you sure you know the following about your volunteer insurance:
            • The scope of coverage.
            • Any exclusions or exemptions in the policy.
            • The terms and conditions of the policy.
            • Policyholder duties.
            • The claims process.
            • The terms and conditions for settling claims.
            • Insurance effective date.
            • Insurance policy expiry date.

        Have you provided your insurer with:
           • Full, precise and up to date details of the work your volunteers undertake.
           • Details of any new activities started since the policy was put in place.
           • Information on actual or potential claims on the policy.

        Arranging Insurance
            •   Interview several insurance agents/companies to find out who best
                understands your business. Ask for a list of references or experience with
                similar types of risk or community organisation.
            •   Obtain quotes from two agents/companies.
            •   Compare the cost vs. the benefits of each proposal.
            •   Assume as much risk as the organisation can through risk elimination or
            •   Obtain competitive bids every 3-5 years. This time period enables you to
                establish long term relationships with your insurance agent/company.
            •   Schedule an annual review with your agent/company to review your
                insurance coverage.
        The operations of voluntary organisations are influenced by state and federal
        legislation. Legislation may vary from state to state. Organisations should therefore
        ensure they are aware of the legislation that applies to their organisation and the
        implications of that legislation.

        In general legislation covering the following areas will create obligations and rights
        that apply to organisations involving volunteers will include:
            • Workplace Health and Safety
            • Child Protection
            • Anti Discrimination and Sexual Harassment
            • Copyright and design acts
            • Privacy Act

        It is also good practice for organisations to be aware of applicable legislation
        covering equal employment opportunities and to apply policies
        and procedures for volunteer management similar to those
        required for paid staff.

        (Photos by Ray Lockett, AdamSelwood & Mykl Roventine)


                   Volunteering has never been so easy

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