Not-for-profits and risk accountability: Insuring the third sector

Not-for-profit organisations face significant challenges in managing organisational risk. In this regard not-for-profits are not unique but they are distinguishable from their for-profit counterparts in that they are less likely to have the resources to fund sufficient risk management strategies and plans, are very vulnerable to cyclical changes in the insurance market and are not usually in a position to pass on the costs of increased premiums to third parties such as consumers of their services This article explores the nature and extent of risks faced by the not-for-profit sector; the appropriateness and scope of risk management to reduce and manage the likelihood and incidence of risk; and the types of insurance and options to cover risks that materialise. It concludes with a recommendation for a potential course of action.