It provides strategies, techniques and an approach to recognize and confront any threat or danger that may hinder the organization from fulfilling its mission. Insurance is just one of many techniques available to a nonprofit to finance its risks. Organizations must pay for losses somehow and insurance is one method. However, insurance does nothing to prevent a risk from materializing. The least costly accident, in terms of time, money and morale, is the one that does not occur.
Risk management goes beyond the purchase of insurance.
A popular, common belief is that the legal system is running amok. Many believe that everyone is suing someone and receiving multi-million dollar awards. However, the facts reflect a different reality. According to a 1988 study by the Insurance Services Office, lawsuits represent less than a third of total liability claims. Nonprofits work to improve the quality of life, not endanger it.