Charities need to take a longer-term view of risk or face increasing threats to their prosperity and security, according to an insurer.
The specialist insurer Ecclesiastical Insurance published its first Charity Risk Barometer, a study of the immediate and emerging risks facing the charity sector.
The report, published with Third Sector, asked charity leaders about the biggest risks facing them over the short- (12months), medium- (one to three years) and long-term (five years).
Funding emerged as the biggest concern (more than half, 54pc of charities) over the short- and medium-term, while reputational risk (26pc) is seen as the biggest threat to the sector over the long-term. Brexit is a major concern for the year ahead, with more than half of charities citing it as a concern, followed by growing political instability (38pc). Brexit was more of an issue for larger charities and became less important to all charities over the longer-term.
The report also highlights emerging risks including charities’ ability to attract and retain talent, stress-related burnout among staff and engaging with the next generation of supporters. The report also highlights a need for charities to think more strategically about risk management to ensure their future prosperity.
Three-quarters of boards have risk discussions as a standing agenda item, but one in four charity leaders feel they aren’t spending enough time considering risk at a strategic level. Worryingly one in three small charities don’t spend any time considering strategic risk on a regular basis.
The research also found that many charities were taking a short-term view of risk. One in five charities is only looking ahead 12 months when considering their strategic risks, and just 40 per cent are looking beyond three years.
Angus Roy, charity director at Ecclesiastical Insurance, said: “These are challenging times for the sector – uncertainty is the new norm and new risks are emerging all of the time. It is imperative that charities spend more time thinking about not only the potential rewards, but also the risks they are facing, now and in the future. As a specialist partner to the charity sector, our role is to help customers manage their risks and our research shows that too many charities are taking a short-term view, which may be limiting their ability to grasp new opportunities and identify emerging threats. It is best, and most logical, to think about risks when a charity is looking at its three- to five-year strategic plan.”
