Risk Management for Insurance
Why Manage Risk?
The Uniting Church in South Australia is aware that the Presbytery, Synod and Congregations rely upon employees and volunteers and that all are fallible human beings. There can be surprises for any organisation at any time - both good and bad. For example a volunteer board member may suggest a new funding source or service opportunity that could help the organisation towards achieving its mission only to find upon implementation that there were unforeseen legal ramifications or negative financial consequences. In another situation, an employee or volunteer may provide a service that ends in a legal dispute, or may carelessly or accidentally do something resulting in harm to themselves or others.
These events can have serious impact on the church’s effectiveness, as well as on the physical or financial welfare of volunteers, employees or other stakeholders. These impacts may be:
- legal actions which deplete the church’s finances;
- legal actions against individual board members, senior employees or volunteers including leaders and office bearers within congregations;
- distraction of management in dealing with crisis situations, and
- adverse publicity affecting/damaging the church’s reputation.
Some events have such devastating consequences for an organisation that the risk of them happening cannot be left to chance. Many of these impacts can be avoided or dealt with systematically through a process known as risk management.
What is Risk Management?
Risk management is the culture, processes and structures that are directed towards the identification and control of risks. It is the process of managing our church’s exposure to potential liabilities. It does this by identifying risks in order to prevent them or reduce them, and by providing for funds to meet any liability that may occur.
- increases our chances of succeeding in an activity or preventing a loss
- minimises the effect of a loss that could not be prevented
- gives managers, employees and volunteers the confidence to pursue their mission without the fear of legal action or harm
- approaches risk in a structured and calculated manner, rather than being haphazard.
Risk Management is not
- about getting as much comprehensive insurance coverage as possible
- about just avoiding legal action
- a control tool of to stifle innovation and human creativity
- about preventing the church from ever taking a calculated risk or acting in faith
- about creating excessive bureaucracy and excluding volunteers from participating in the organisation.
Risk is a part of living in our society. The challenge is to treat the risks in an appropriate and cost-effective manner so as to protect the church and its stakeholders. This must be done without dampening the inspiration of volunteers or the leading of God’s Spirit by introducing inflexible bureaucratic rules and procedures. It requires, in essence, a cultural shift.
What is the Difference between Risk Management and Legal Compliance?
A simple example can be demonstrated with a motor vehicle. It is a legal requirement to ensure that a vehicle is registered in order to be driven on a public road. However, in the exercise of Risk Management, care is taken to ensure that the vehicle has adequate tyre pressure/treads and good brakes.
In working out what risks it faces, your Congregation will probably identify legislative requirements and the risk of incurring a penalty for breaking a law (for example, electrical tagging & testing). This type of risk should be dealt with by a legal compliance plan rather than a risk management plan. This is because the law requires us to comply actively with (obey) legislative provisions, regardless of cost.
If we have broad Insurance covers, why do we need Risk Management?
Insurance is only one way to manage the risks facing our church. It may not be the best way of managing a risk because:
- it may cost much more than other ways of controlling risk;
- it does not achieve the preferred outcome (preventing harm), it only compensates after the event/injury;
- it may not cover all risks and may be capped to a ceiling, and;
- it relies on the insurance company being solvent and able to pay compensation at the time of the claim
Risk Management and Other Statutory & Insurance Requirements
To protect the users of church property it is necessary to conduct regular checks to ensure that the buildings:
- comply with the relevant aspects of the Building Code (including essential safety provisions) and Work Health and Safety regulations;
- are fitted with appropriate fire safety equipment and that these items are regularly serviced;
- have appropriate evacuation signage in place.
Church Councils should also be aware of:
- regulations regarding safety for people working at heights; (Contact: Building Projects & Compliance Officer)
- regulations regarding increased “duty of care” for people working with children, youth and vulnerable people; (Contact: Training and Development Officer)
- guidelines for the appointment of staff; (Contact: Human Resources Manager)
- changes to the definition of a worker under the workers compensation legislation and how this may affect your church; (Contact: Human Resources Manager)
- changes in legislation from previously requiring an organisation to appoint a “Responsible Officer” to now defining the role and responsibilities of an “Officer” of a PCBU (Persons Conducting Business or Undertaking) where Officers are under an obligation to ensure the PCBU complies with WHS laws; Contact: Human Resources Manager).
- regulations relating to the sale of second hand items such as clothing, furniture and electrical goods; (Contact: Department of Health SA – Public Health on 8226 7100). Also refer to fact sheet "Food Safety - Retailers- Secondhand">
- regulations regarding preparation, storage and sale of food (Contact: Your local council Environmental Health Officer or check the Food Standards website> - you can also refer to theteh Health SA website>)
- legal requirements when dealing with property transactions including leases and licences to use land. (Contact: Property Administrator)
For further information telephone Uniting Church SA on 8236 4200. Country callers can call 1300 766 956. Ask for the relevant person; contact your Local Council or check the Australian Building Codes Board website>