Charity risk management in a more unstable world
Global charities increasingly operate in situations of greater political risk, including in conflict and post-conflict environments. This can negatively impact their plans to assist some of the world’s most vulnerable communities. According to a new Worldwide Risk Index, 21% of surveyed risk managers in large charities and corporations said they have reconsidered expanding operations into new countries due to heightened political risk.
Responding effectively to political risk, including unrest and even violence, is especially difficult for international charities. Donors are placing evermore emphasis on assisting vulnerable people in conflict and post-conflict environments and even charities accustomed to working in high risk countries need to evaluate the risk to employees (and volunteers) and potential liability that could affect all of these operations.
Protecting employees (and volunteers) is more difficult in conflict situations, for obvious reasons. The heightened risk of direct violent harm is further complicated by charities’ cooperation with local and international security forces. While “civ-mil cooperation” is an issue of active and even heated debate within the global NGO community, it increasingly occurs in unstable and violent environments.
On the most basic level, charities need to know security forces’ location and if their actions could impact the communities with which charities work. Charities often need to go further, explicitly cooperating with security forces that deliver goods and services to those harmed by disaster.
Preventing avoidable tragedies
This cooperation, even if it’s simply information sharing designed to prevent avoidable tragedies and assist with logistics, can make charities appear less than independent to certain groups. The result is increased attacks against aid workers. Terrorist and other groups have entered a new phase of deliberately targeting aid workers.
According to the Aid Worker Security Database, the year 2013 set a new record for violence against civilian aid operations, with 264 separate attacks affecting 474 aid workers. Of the 474 victims, 155 aid workers were killed, 178 were injured, and 141 were kidnapped. Overall this represents a 65% increase in the number of victims from 2012. While the figures declined in 2014, they remain at levels well above the average of the past decade.
The need for heightened security, including private security, can add other complications to charity-donor relationships. Donors have intensified their oversight, with a particular emphasis on overhead costs. While charities cannot fulfil their missions in insecure environments, the cost of protecting staff can make them look less efficient and cost conscious than they are.
The media are often keen to publicise cases of such “waste”- even while demanding that aid workers receive all the protection possible from their charity employers. This also has a direct effect on a charity’s trustees who have a fiduciary responsibility to monitor the expenses of the charity but also to show “duty of care” as it relates to the charity’s employees.
Medical infrastructure crippled
Additionally, the medical infrastructure where these charities are operating is often crippled because of ongoing conflict in the Middle East, natural disasters in Nepal, or pandemics in Africa. Charities are increasingly seeing the need to use medical evacuation for both international and national staff in the case of a medical event. This is another significant cost that must be factored into the cost of expansion or charities risk liability because of neglect of “duty of care” for their employees.
What can charity managers do to help manage this new world of instability, donor expectations and higher medical and security costs, including increased insurance premiums?
First, managers should invest more in risk management overall. This means emergency planning, training, security and other techniques to manage and reduce risk. This includes testing an emergency plan, which typically highlights gaps.
To achieve the level of management commensurate with heightened risk, more charities need to elevate the role of risk management within their organisations. While security is central to risk management, risk managers are more than simply security compliance officers. They can and should play a key role during programme planning and implementation.
This enables risk managers to help shape programmes that reduce the need for “security,” both before and after things go wrong in the field and ensure evacuation plans for all types of contingencies are in place should the need arise.
Next, charity risk managers should consider retaining the services of the growing number of political risk, insurance and security consultancies which provide political intelligence and situational analysis. Although these companies’ quality varies, the experienced firms can provide useful insights into potential risks charities might encounter, especially when starting operations in a new location.
These companies can also provide specific expertise in the event of a kidnap and ransom situation or a medical or political evacuation. With the right international insurance, these types of services would be covered under the insurance policy.
As events in Tunisia, Thailand and other countries make clear, executives need to integrate into their business operations the fact that no country is absolutely “safe” anymore. In a different dimension, the ghastly events in Paris underline this in a grim way. There is significant risk nearly everywhere. Charities have a fiduciary duty to properly evaluate and manage risk, and the new breed of political risk analyst can help fulfill that duty.
Review insurance programmes
Finally, charity risk managers should review their international insurance programmes. There are new ways to protect employees and organisations. These include political violence and risk, kidnap and ransom (K&R), evacuation and related policies. While new insurance covers will raise costs in the short run, they will likely lower them in the long run. For example, the Ebola crisis opened many charity managers’ eyes to the direct cost of evacuating staff under crisis conditions.
The most forward-looking charities link their brokers or insurance companies to their overall risk management strategy. The best brokers and companies act as operational partners. They become familiar with charities’ operations and actively recommend ways to reduce risk. This not only lowers insurance costs. Additional overhead costs, including security, are often reduced when operations are improved to make them more stable and predictable.
Global charity operations are more dependent on particular political factors than at any time in modern history. Tragically, for both charities and the beneficiaries they serve, these political factors often include violence by both the states and groups that challenge them. Political unrest and instability are the new “normal” realities in increasingly large areas of the world.
Charity managers need to get serious about bringing their business operations into line with the “facts on the ground.” Risk management, including insurance, should be at the center of those business strategies.
