nonprofit Archives - World Risk Management

The Promise and Risks of Receiving Appreciated Assets

Feb 27, 2019 | RIsk Management News

It is not a risk-free proposition for nonprofit boards to make investment decisions that meet philanthropic goals. This is all the more difficult for those trustees without a background in finance. The simple answer is usually to allocate the investments conservatively and rebalance periodically to at least beat inflation and preserve capital. Large charities like university endowments turn to more sophisticated methods of portfolio diversification, expanding beyond stocks and bonds into vehicles like hedge funds, private equity, venture capital, and real estate.

The Conversation’s detailed article cautions that it is not enough to focus only on returns; in fact, it’s more important to consider risk-adjusted returns. In the case of digital currencies, it would have required nerves of steel for trustee investment committees to commit to pre-established decision-making processes to avoid the bitcoin crash in early 2018, after it rose by 1,318 percent against the US dollar in 2017.

These gains gave way to massive losses in the first eight months of 2018, when digital currencies plunged more sharply than the dot-coms crashed in the early 2000s.
Some charities that received massive cryptocurrency donations in 2017 may not have been able to convert them into regular money before they lost much of their value the next year. Silicon Valley Community Foundation, for example, disclosed in its 2017 audit report that for more than 45 percent of its investment assets, restrictions would prevent them from being converted to cash at any point in 2018.
The fact that charities only disclose their financial data once a year means that the scale of their at-risk wealth, as of now, is unknown.

There are more reasons than volatility to be concerned about holding onto investments of cryptocurrencies. Wallets and exchanges used to hold the investments can be hacked. Compliance issues abound. Regulators are still catching up to the IRS ruling in 2014 that treated digital currency as a form of investment property. The sweeping new tax billpassed into law last December may bring more change. Inasmuch as digital money ledgers for transactions are owned and maintained by the users of the systems rather than controlled by a government or a central bank, it is difficult to predict how government will eventually choose to manage this revolutionary type of money.

The Conversation article goes on to examine other forms of appreciated assets being given by a shrinking group of ever-wealthier donors and the “charitable middlemen” needed to help facilitate these donations.

Fidelity Charitable got 61 percent of its donations in assets other than cash in 2017. Other prominent donor-advised fund sponsors saw a similar result. Schwab Charitable obtained over 70 percent of its 2017 donations in non-cash assets. In the last month of the year, that figure was 80 percent for Vanguard Charitable.
These fast-growing charities bring a key skill: harvesting capital gains. That is, they accept tax-advantaged donations, hold onto that wealth, and—in most cases—transfer the money derived from those assets to the donor’s charities of choice when the donor asks.

For nonprofits, it could be said that today’s donor classes are creating as many challenges as solutions. As government funding continues to diminish for many of the issues addressed by the nonprofit sector, private philanthropy becomes all the more important, and along with it, the skills to properly raise, receive, and manage the forms and flavors in which it is given.

Author: Jim Schaffer
Source: Nonprofit Quarterly

Insurance market evolving to handle terrorism risks

Aug 31, 2018 | Informative, Loss Control, RIsk Management News

While the number of incidents and casualties declined in 2017, a report released Monday by Marsh L.L.C. said terrorism is still a significant threat and that the insurance market is adapting to handle the evolving risk.

Marsh’s 2018 Terrorism Risk Insurance Report, which explores the state of the terrorism insurance marketplace, said that in the wake of recent events, terrorism insurers are expanding terrorism definitions to include active assailant events.

In some cases, the report said, insurers also are developing specialty products that offer first- and third-party business interruption protection for businesses that suffer lost income or revenue without the need for a direct property damage trigger.

Although fewer people were killed in terrorist attacks in 2017 than in 2016, the Marsh report said the means of attack and perpetrators have shifted.

“Past attacks were carried out primarily by specific groups against perceived high-value-high-profile targets,” the report said. “While that threat remains, many recent attacks have come against soft targets and been perpetrated by ‘lone wolves’ and small groups with no direct connection to known terrorist organizations. Weapons of choice now include vehicles, knives and other handheld devices.”

In 2017, the report said, pricing increased in five of the 17 industries surveyed by Marsh, with the sharpest increases being felt by hospitality and gaming companies, public entities and nonprofit organizations, which have been targets of terrorist acts in recent years.

Pricing declined in seven industries, the report said, most notably for energy and mining and construction companies, reflecting the generally positive conditions in the property insurance market prior to the 2017 Atlantic hurricane season.

Sixty-two percent of U.S. companies in 2017 purchased coverage embedded in property policies under the Terrorism Risk Insurance Program Reauthorization Act of 2015, or TRIPRA. Companies in the Northeast U.S. were most likely to purchase terrorism insurance, Marsh said.

The number of Marsh-managed captive insurers actively underwriting one or more insurance programs that access the TRIPRA increased 44% to 166 captives in 2017.

After incurring sizable ransomware losses in 2017, kidnap and ransom insurers are seeking to restrict coverage for cyber risks in their policies.

Terrorism insurance capacity remains strong, the report said, but pricing could increase as global insurance costs generally increase following natural catastrophe losses in 2017. January 2018 year-over-year pricing changes for a majority of reinsurance program renewals that included terrorism coverage averaged flat to an increase of 10% on a risk-adjusted basis, according to the report.

The Marsh report made several suggestions for businesses in the face of evolving terrorism risk, including continually reviewing and reevaluating their risk financing programs to ensure they have adequate protection for property, business interruption, workers compensation, general liability and cyber losses.

The report also encouraged businesses to effectively model their terrorism risk and to build and test robust crisis management and business continuity plans.

Author: Rob Lenihan

Source: Business Insurance

Risky business: Keeping employees safe in a world of emerging threats

Aug 24, 2018 | Blog-All, Informative, Loss Control, RIsk Management News

Recently, I had the chance to spend some time at Walt Disney World in Orlando, Florida, when I attended the NAMIC conference in February. One session included a presentation by Barry Dillard, director of claims for Walt Disney World, where he shared the company’s approach to handling a wide variety of claims.

I sat down with their vice president of risk management to learn about some of the strategies they employ, and I had the opportunity to tour Walt Disney World itself to peek behind the curtain and see how this massive theme park creates the magic for its guests and cast members while keeping everyone safe.

Believe it or not, the Walt Disney World Resort covers 40 square miles and is twice the size of Manhattan. Within its confines, this world-class attraction employs 75,000 cast members, each of whom plays a critical role in spreading the Disney magic. Their emphasis on safety is both taught and caught, which is especially important when serving the millions of guests who visit the Disney attractions around the world.

The Walt Disney Company is extremely proactive in their risk management strategies — it truly is everyone’s responsibility — not just the realm of those at the corporate level. As is often the case in life, the simplest things can make the biggest difference. Merely walking the parks, hotels, shops, and restaurants can yield valuable information, allowing cast members to identify small issues before they become larger ones. Even in one of the most magical places on earth – reality tends to intrude.

Unexpected risks arise every day and training plays a key role in mitigating them. Hackers are constantly devising new ways to access company information or hold it for ransom. The use of ransomware is expected to increase 350% this year, so being vigilant and backing up data has never been more important.

The number of shooting incidents in businesses and other settings is increasing at an alarming rate. Knowing what to look for and how to respond in these situations can literally be the difference between life and death.

For better or worse, new risks are changing our behavior — how observant we are in open spaces of our surroundings, what we post on social media, where and how we protect our personal information, what we open online and how we train our staffs. It really is the smallest things that can make the biggest difference in keeping people safe.

Author: Patricia L. Harman

Source: PropertyCasualty360

6 Essential Tips for Getting Through Any Nonprofit Crisis

Aug 17, 2018 | Informative

Is your nonprofit ready to be tonight’s breaking news?

You don’t even have to be guilty of something to become the daily news. Bad things happen even to worthy nonprofits.

During my nonprofit career, organizations I have worked for have experienced a client’s death; a product tampering that threatened the biggest fundraiser; an athletic scandal; and a mass shooting on campus.

We learned the hard way to be prepared or prepare to suffer more than necessary.

Here are six suggestions for better crisis management by your nonprofit.

01. Don’t Wait

Many organizations only get their crisis plans underway once a disaster has struck.

Instead, brainstorm possible scenarios or types of disasters that could happen and start planning for them.

Educate yourself about nonprofit crises and talk to those who weathered them. Invite a veteran of disasters to speak to your staff and your board. Assign your public relations staff to draft a crisis plan and give them a deadline.

Advocate for real emergency preparedness. Many people in nonprofits, especially small organizations, don’t think anything bad will ever happen. They don’t want to think about it. They don’t believe that they have the time to prepare.

And they might even resent staff who push on this topic. Speak up anyway. If that crisis happens, people will appreciate your forethought.

02. Realize That Crises Take Many Steps

Crises come in all flavors. Some are high profile. Others might be more low key. But, in a time of 24/7 news, thinking you can keep the situation out of the public eye is a fantasy. If nothing else, local media will likely be all over it. Have you built up good relationships with local media outlets?

Like a fire, quickly getting on top of a crisis can make a huge difference in the outcome.

Your crisis might be an accident involving a volunteer, the death of a client, embezzlement by your chief financial officer, a lawsuit by a former employee, or a hack attack that threatens the privacy of your donors and clients.

They all require different responses. Prepare for as many as you can imagine, and do your best to put plans in place to minimize the damage to your nonprofit’s reputation.

Even if something happens that you didn’t think of, your preparation for other types of emergencies will help. The planning may reveal gaps in security, insurance coverage, inadequate human resource policies, or the shortage of people with particular skills.

Practicing any emergency response is likely to make your organization better prepared for others.

03. Develop a Logistical Plan and a Communications Plan

A logistical plan has to do with getting everyone out of the building in case of an earthquake, texting staff and clients that a gunman has been spotted in the building, or handling a medical emergency.

Develop a risk management program to deal with the loss of life, property, and insurance issues. Identify point people who can go into action quickly, notify appropriate help, and manage evacuation plans.

A communications plan involves identifying spokespeople, assigning someone to gather the facts as they emerge, writing press releases, and locating a place to have a press conference.

04. Get Your Social Media House in Order

Social media can be a blessing during a crisis IF it you handle it well.

Almost all nonprofits use some level of social media. Decide now who will manage that media during an emergency situation. Set up a dashboard (here are nine to consider) where you can monitor all social media platforms and respond quickly.

Because of social media, there is little chance of controlling information in a way that used to be possible. So don’t try. But you can give useful information, fight rumors with fact, and express concern.

Don’t just let your social media pages sit there. Use them. One study found that nonprofits often do not respond to social media questions or complaints.

However, social media may be the best way to show the human face of your organization and shore up its reputation for being kind, sympathetic, polite, accurate, and a source of unbiased information.

05. Prepare to Speak

Every minute counts after a crisis. Don’t waste any of them. Silence is deadly. Get out with appropriate statements and messages immediately, even if it is only to say that you know about the situation, you’re working on it, and that few facts are known at the moment.

Then keep it up with updates as events develop. For many situations, you may have already prepared statements.

In all communications, be concerned, show concern, speak concern, and always tell the truth. Don’t be afraid to say, “We don’t know.” That is better than guessing. Add that you are working as quickly as possible to get all the facts.

Far more is lost by refusing to speak to the media than is risked by doing so. A vacuum of information breeds media hostility and public loss of confidence.

06. Provide Media Training

Media training will be your best friend during a crisis. Don’t risk a media meltdown.

Put together a media training program before disaster strikes. Train anyone who might need to be a spokesperson. That might be your board chair, your CEO and other key staff, such as a media relations person. Also, consider your top fundraiser, your volunteer coordinator and, where applicable, your security person or facilities manager.

Media training need not cost a lot if you have someone on your board who works in public relations or someone who is a member of the media. The key is to do it regularly so new people become trained, and others don’t grow stale.

Author: Joanne Fritz

Source: The Balance, Small Business

What Organizations Can Do to Strengthen Their Cybersecurity Stance

Aug 10, 2018 | Informative, RIsk Management News

The challenges of cybersecurity have been covered ad nauseum: the ever-increasing volume and sophistication of attacks, the shortage of skilled cybersecurity analysts, and the general inability to keep up with all that is going on in the cybersecurity market have all been well documented.

So, what can be done? Given all these conditions, how can a business better protect their operations and resources? The short answer is they can start using a combination of technologies, services and education to stem the impact of cyber-attacks on their organization.

Technologies Can Help Fill the Gap Created by the Skills Shortage
Organizations can look for technologies that are primed to automate and orchestrate responses to cyberattacks.

This is not a new concept – back in 2011, the US Department of Homeland Services described, in their paper “Enabling Distributed Security in Cyberspace,” an ecosystem where “cyber devices are able to work together in near-real time to anticipate and prevent cyberattacks, limit the spread of attacks across participating devices, minimize the consequences of attacks, and recover to a trusted state.”

This is very different from what most organizations have today. Typically, companies have a host of cybersecurity technologies, from firewalls and to that are working alongside, but not in concert with one another. Each solution is specialized to look for something – e.g. evidence of a distributed denial of service attack, indicators that a user’s credentials have been compromised, pointers to data being leaked via cloud apps, signs that a mobile device has been taken over, etc.

Each of these solutions requires someone to deploy, manage and maintain it, as well as make sense of the information it generates. The data these solutions produce and the people managing them often remain in a silo, making it hard for anyone or anything to see the complete picture to quickly and confidently take action, as appropriate. But change is coming.

Half of the respondents (55%) to a survey by Intel Security “believe cybersecurity technologies will evolve to help close the skills gap within five years.” Likely this will come in the form of advances in intelligence, automation and orchestration. We have already seen vendors dabble with artificial intelligence (AI) and machine learning to accelerate the identification of an attack and support the orchestration of more automated responses.

It has been particularly effective when entities or events can be easily incriminated or exonerated, such as in the incident response process. A large organization can average close to 17,000 alerts a week, which is why only one in five alerts ends up being something worth dealing with.

A solution, however, that can automate investigations and help prioritize subsequent activities is sustainable. Hence, we have seen an explosion in the IR automation market – the Enterprise Strategy Group found that 56% of enterprise organizations “are already taking action to automate and orchestrate incident response processes;” Technavio has the IR system market growing at a compound annual growth rate (CAGR) of 13%.

To truly ease the burden on cybersecurity analysts and improve the efficiency and productivity of their cybersecurity infrastructure, organizations need to look for and demand more of these kinds of innovations from their technology vendors.

Services Play a Viable Role in Augmenting Capabilities
The reality is there are always times when organizations, even those with SOCs that are skilled and staffed appropriately, may need a little help. This is where services come in; we are finding there is greater acceptance that augmenting resources with a service offering can be a good way to enhance the effectiveness of an organization’s cybersecurity strategy and implementation.

An outsider’s view can give organizations the knowledge they need, a fresh perspective or a new way of thinking that helps drive better decision-making and ultimately better security.

The problem is managed security services providers (MSSP) are having to staff up themselves to meet the demand, which is why we’ve seen some a lot movement in this space. For example, there has been FireEye’s acquisition of Mandiant, IBM’s acquisition of Lighthouse Security, and BAE System’s acquisition of SilverSky, etc.

Ultimately, being able to deliver the experience and know-how organizations need will help close the gap and strengthen overall security.

Educational Opportunities are Key to Bolstering General Awareness and Expertise
At the end of the day, nothing replaces the knowledge and expertise of an in-house analyst. Only they truly understand an organization’s nuances, putting them in the best position to effectively identify, contain and fully remediate many of the more sophisticated attacks targeting the organization.

Unfortunately, as we’ve already mentioned, these folks are in short supply, so organizations need to look across their IT organization to develop cybersecurity awareness and know how.

Training courses taught by experts with real-world experience and include lab time are invaluable for building the skills that will be applicable to strengthen the organization’s security stance. Virtual sandboxes (vSandbox) and Ultimate Test Drives (UTD) are also good tools to deploy. They allow attendees to test and work with solutions in a safe environment, so they can see firsthand how they can be deployed and used to improve the cybersecurity capabilities of the organization’s own environment.

Ultimately, to address the cybersecurity gap and all the threats that are targeting an organization, it will take a confluence of technologies, services and experiential learning. Together, organizations can deploy the skills and capabilities they need to keep up, and ideally get ahead, in this harried cybersecurity landscape.

Source: InfoSecurity Group
Author: Pradeep Aswani

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