Risk Management Plan. The Nonprofit Risk Management Center,
www.riskmanagement.org, defines risk as “a measure of the possibility that the future may be surprisingly different from what we expect.” Nonprofit organizations typically view risk in terms of potential losses - human, financial, reputation. A risk management plan would involve identifying risks and the amount of exposure anticipated, protecting the assets of the organization through sources like workers’ compensation, directors and officers’ liability insurance, general liability coverage, and educating the organization’s staff and volunteers (including board members) regarding their responsibilities. A Disaster Recovery Plan can be one aspect of a comprehensive Risk Management plan. An Insurance Checklist is another segment that should be completed.
Insurance Coverage. Insurance coverage is one technique for financing risks. The role of insurance and within your risk management program depends on the organization's goals and resources. Insurance can be a significant expense for a cash-strapped organization. This should be weighed against a single claim wiping out the nonprofit. In contrast, a nonprofit can be insurance rich and coverage poor when its insurance program doesn't address its risks properly.
Whether the nonprofit has no funds for insurance or unlimited funds, it's wise risk management to assess the risks that are most likely to occur and protect your organization against those possible claims with risk management strategies and some method of offsetting costs that might occur if defending a claim or lawsuit against the nonprofit. Remember that insurance is a tool of risk management, not vice versa. The role of insurance in a nonprofit's risk management program varies with each organization. Some things to consider include:
1. What do you wish to accomplish?
2. What are your organization’s financial resources?
3. How much uncertainty can the organization and its board tolerate?
4. What are the nonprofit's risk management activities?
The nonprofit's pre- and post-loss goals affect the amount of insurance it purchases. The greater the need for financial certainty and a sense of security, and the necessity of continuation of operations, the more insurance the organization will likely purchase. 
