Test your knowledge of some of the biggest recent risks
Estimated Reading Time: 3 minutes
Lead Consultant and Editor
By Rachel Sams
Sometimes when you need to look forward, it helps to look back.
As you navigate risks that could bring your nonprofit challenges and opportunities this year, we offer a chance to test your knowledge about some of the biggest risk events of 2021, as highlighted by Business Insurance and Risk Magazine.
The biggest risk themes that surfaced on the lists included extreme weather and climate change; cybersecurity; and mergers and acquisitions.
Climate change is one of the biggest risks facing any organization, not to mention all creatures on earth. Do the findings of the Working Group I report ring a bell? That’s the first installment of the Intergovernmental Panel on Climate Change’s Sixth Assessment Report. It sounds an urgent warning about the risks of human-caused climate change. More than 200 authors contributed to the report, which contains 14,000 cited references.
The IPCC report found that global temperature is expected to reach or exceed 1.5 degrees Celsius of warming averaged over the next 20 years. That amount of warming will bring more heat waves, longer warm seasons, and shorter cold seasons. To even keep warming close to 1.5 degrees, humans must make immediate, rapid, and large-scale reductions in greenhouse gas emissions. A sustained rise in extreme weather can present one of the visible signs of climate change. Hurricane Ida slammed into Louisiana in August, leaving parts of the area without power for months. AccuWeather estimated Ida caused $95 billion in damage.
People of color bear a disproportionate share of the effects and the costs of global warming. “A legacy of systemic racism and economic oppression have penned communities of color in dangerous real estate, because companies have long considered people of communities more viable locations for polluting factories than white neighborhoods where the outraged community pushback would have more resources at its disposal,” writes Dr. Robert D. Bullard, often called “the father of environmental justice.”
Cybersecurity risks became realities for many nonprofit and for-profit organizations last year. The average cost of organizational data breaches rose 10 percent in 2021 from a year earlier, according to IBM. Ransomware attacks deploy malware to disable an organization’s systems and, frequently, steal data. Attackers demand money to release the system. These attacks against organizations have skyrocketed, rising 150 percent in 2020 from the year before, according to the Harvard Business Review. The Colonial Pipeline, which supplies gas, diesel and jet fuel to the eastern United States, faced a ransomware attack that shut the pipeline down for 11 days.
The fallout from a called-off merger between insurance giants Aon and Willis Towers Watson appeared on both Business Insurance and Risk Magazine’s 2021 risk roundups. Aon and Willis mutually called off the deal, saying they had reached an “impasse” with the U.S. Department of Justice. The DOJ sued the companies in June to halt the merger, saying it would reduce competition and increase prices. Though Aon and Willis didn’t make it to the finish line, they joined a long list of companies that found their deals didn’t play out as expected. Did you know that most mergers and acquisitions ultimately fail? One key reason: acquirers often get lost in the details of how they would integrate the financial and IT systems of two companies, and don’t pay enough attention to whether the two workforces would have a psychological fit, according to the MIT Sloan Management Review.
Of course, looking back at previous risks—in your own organization and in the world—helps you see patterns, but can’t tell you definitively what’s ahead. For example, geopolitical risk didn’t have a huge presence on the two risk lists we examined, but Russia invaded Ukraine two months into 2022.
If you need some assistance as you envision and plan for the upside and downside risks your organization might face this year, the Nonprofit Risk Management Center is here for you. Explore the rich array of resources on our website and reach out to us at 703-777-3504 or info@nonprofit.org if you need help.
Test Your Knowledge
“First let me congratulate you on a conference well done. I had a great time at the Nonprofit Employee Benefits Conference and walked away with some valuable tools and questions that we’ll need to be addressing in both the short and long term. Thanks to you and your staff for all you do to provide us with quality resources in support of our missions.”
— Scott Brown, Mohonk Preserve
“BBYO’s engagement of the Center to conduct a risk assessment was one of the most valuable processes undertaken over the past five years. Numerous programmatic and procedural changes were recommended and have since been implemented. Additionally, dozens (literally) of insurance coverage gaps were identified that would never have been without the work of the Center. This assessment led to a broker bidding process that resulted in BBYO’s selection of a new broker that we have been extremely satisfied with. I unconditionally recommend the Center for their consultative services.
— Sidney Abrams, BBYO
“Melanie Herman has provided expert, insightful, timely and well resourced information to our Executive Team and Board of Directors. Our corporation recently experienced massive growth through merger and the Board has been working to better integrate their expanded set of roles and responsibilities. Melanie presented at our Annual Board of Director’s Retreat and captured the interest of our Board members. As a result of her excellent presentation the Board has engaged in focused review which is having immediate effects on governance.”
— Pamela Mattel, Basics Promesa Systems Inc
“The Nonprofit Risk Management Center has been an outstanding partner for us. They are attentive to our needs, and work hard to successfully meet our requests for information. Being an Affiliate member gave us access to so many time- and money-saving resources that it easily paid for itself! Nonprofit Risk Management Center is truly a valued partner of The Community Foundation of Elkhart County and we are continuously able to optimize staff time with the support given by their team.”
— Jodi Spataro, Community Foundation of Elkhart County
“The board and staff of the Prince George’s Child Resource Center are extremely pleased with the results of the risk assessment conducted by the Nonprofit Risk Management Center. A thorough scan revealed that while we are a well run organization, we had risks that we never imagined. We are grateful to know that we have now minimized our organizational risks and we recommend the Center to other nonprofits.”
— Marti Worshtil, Prince George’s Child Resource Center
Great American Insurance Group’s Specialty Human Services is committed to protecting those who improve your communities. The Center team has committed to delivering dynamic risk management solutions tailored to nonprofit organizations. These organizations have many and varied risk issues, hence the need for specialized coverage and expert knowledge for their protection. We’ve had Melanie speak on several occasions to employees and our agents. She is always on point and delivers such great value. Thank you for the terrific partnership and allowing our nonprofits to focus on their mission!