Welcome to the Wisconsin State Crime Stoppers, Inc. Web Site!

From Our President,
K. Scott Abrams, CPA, CGMA

                                

 

President’s Message                                                                                                                          K. Scott Abrams, CPA, CGMA

 

Risk Management – Part II

 

As you may recall from our last issue of In Pursuit, the President’s Message delved into risk management with a focus on commercial general liability (CGL) insurance. In this issue, we will continue our discussion on risk management with an emphasis on Directors and Officers Liability Insurance, or more commonly referred to as D&O.

 

As a refresher, let’s recap some of the information surrounding ‘risk management,’ as it is very important to understand and implement in your local programs, particularly if you engage in any fund raising events, public functions or gatherings, publish most wanted posters or employee any individuals in the Crime Stoppers program. 

 

From a business perspective, risk management can be defined as:

-          The identification, assessment and prioritization of potential organizational risks; and,

-          Undertaking a coordinated and economical application of resources to minimize, monitor and control the probability and potential impact of unfortunate events.

 

Focusing specifically on D&O insurance, this coverage indemnifies/reimburses for losses or costs in the event the insured Crime Stoppers program suffers a loss as a result of a legal action brought against the organization for an alleged wrongful act by the Board of Directors and/or Officers. With today’s litigious society many nonprofit organizations need to protect themselves from a litany of potential allegations: discrimination, harassment wrongful termination, misleading reports or misrepresentations, libel, slander, mismanagement of assets, etc.  It is not only the issue of a settlement in these matters, but it also relates to the defense costs in attempting to defend these types of cases.

 

As a relevant application and example of this many of our local nonprofit Crime Stoppers organizations undertake a Most Wanted portion in their program on the web or through publications. Many of these Most Wanted programs produce pictures along with a description of what the individual may have allegedly done. Most Crime Stopper programs receive this information directly from a law enforcement agency and are dependent on that agency to have completely vetted and reviewed this information before passing it along to your organization. However, what if the local law enforcement agency provided you the wrong picture of an individual? What if the individual has already been arrested and completed any sentencing requirements? I hope these don’t seem too far-fetched, because these are actual instances that have occurred with other Crime Stopper programs and have been sued for libel and defamation based on the incorrect information provided in the Most Wanted posters.

 

In addition, many nonprofit organizations such as Crime Stoppers may not realize that their board members may be held personally liable for the actions of the organization. Therefore, it is imperative to protect the organization’s assets, mission and individual personal assets by having sufficient D&O insurance.  There is a misconception that CGL and umbrella insurance coverage may take care of D&O claims.  However, as you may recall from last issues article, CGL provides coverage for loss arising from bodily injury and property damage, but legal claims arising from discrimination, slander and other employment issues are not covered through the CGL policy.

 

Although there are some states that provide immunity from prosecution based on the voluntary service of a nonprofit organization, these laws are relatively untested and also do not apply to any federal statutes that the nonprofit organization may violate.

 

If you’re interested in learning more about D&O insurance coverage considerations, specific D&O policy limits, there is a good article to reference on the GuideStar website at: https://trust.guidestar.org/blog/nonprofit-insurance-coverage-you-need-more-than-a-directors-and-officers-policy providing additional guidance regarding how protected is your nonprofit organization and how can you protect your organization.

 

Again, as a Crime Stoppers USA member, your organization may obtain discounted insurance coverage for lawsuits resulting from bodily injury and property damage through Great American Insurance. You can find out more about this discounted insurance product on the Crime Stoppers USA website under the menu item ‘Resources’, or go directly to this website address:  http://www.crimestoppersusa.org/insurance/

 

Your fiduciary responsibility as a board member is far-reaching. Ensure that your organization’s assets and mission are protected by having adequate coverage through the appropriate administration of a risk management program.