Five global risks affecting charities in 2015
- Charities should be aware of global as well as local risks to the sector
- Risks occurring in other parts of the world could impact on the smallest of charities in the UK
- We look at five of the key risks highlighted by the World Economic Forum and what you can do to lessen the impact on your charity
Global risks, from the geopolitical to environmental to technological, may seem remote and intangible for many charities, but that doesn’t mean you shouldn’t be paying attention.
Phil Coley, strategic risk team leader at Zurich, explains. “It could be tempting to feel that these risks are somehow distant and not really connected to everyday life, but all organisations – no matter what they do – should be aware. The challenge is thinking how they filter down, and how they might affect you moving forward.”
We pick five of the risk areas listed in the Global Risk Report by the World Economic Forum in 2015 as most likely to threaten the social stability, and look at how charities should be approaching them.
1. Interstate conflict
This area of risk is most relevant to charities that work overseas. The Wellcome Trust, which funds research in the UK and overseas, sends experts out to visit its projects abroad. The trust monitors the situation in relevant countries and has increased the support it gives these travellers, in response to the risk of interstate conflict.
“They book through our travel team, they’re logged into a system, and they’ve got an app so their travel is monitored and it knows where they are and they can get updates on security issues,” explains enterprise risk manager Fiona Davidge.
“We’re also signed up to organisations like International SOS, for advice and if necessary an on-the-ground response.”
For charities without overseas operations, it’s about the “knock-on effect”, says Coley: “The most topical one is population movement, so if you’re starting to see a general increase in migration into the country, what does that do to demand on your services and how do you respond to that?
“It’s also worth being aware of supply chains. You may be relying on something that’s made or developed in another country that is suffering from some sort of conflict or crisis.”
Since unemployment is so interlinked with other elements of social well-being – affecting how well an adult can support themselves and their family, and repeatedly being linked to physical and mental health problems – it is an issue that charities across the sector will encounter.
If unemployment increases, many social sector organisations are likely to feel the pressure.
“Charities need to think about the pressure unemployment can put on their particular services,” says Coley. “You may be providing services in areas where there are high levels of unemployment or deprivation, but can you respond to that demand?”
However, Becky Tucker, vice chair of public risk management association Alarm, points out that charities should also be taking into account any opportunities these risks might present.
“For example, while unemployment figures are on the increase, the need to find work experience and temporary work positions for those who are unemployed creates plenty of opportunities for both charities and individuals, with an increased pool of people who are looking to do something useful and meaningful,” she says.
3. Climate change adaptation
With climate change, consider not only how your operations are affected but how your services might need to adapt.
Coley explains: “Are your assets fit for purpose, given the changing climate and more extreme weather conditions, in the UK and more broadly? Take account of that in the services and the buildings you have.
“Charities often provide services to people who are potentially affected by these incidents and challenges. You just need to look around the world to see the major extreme weather events that occur now, so are you able to still deliver in that environment?”
For the Wellcome Trust, climate change adaptation has meant the creation of a completely new research initiative. The project looks at how environmental changes over the next 20 to 30 years may affect food and nutrition security.
“We spent time thinking about where we add value in this space, rather than just launching into it, as it’s already quite a full space for debate,” says Davidge.
The findings will be used to predict the impact of environmental change on food bills, diet and health in the three example countries of the UK, Mexico and Ethiopia.
4. Cyber attacks
The World Economic Forum notes that with the world becoming more interconnected in the digital space, cyber attacks have increasing potential to inflict damage, as different interests try to gain control. Since charities often hold sensitive or personal information, they can be targets.
“We’re very reliant on technology now, and charities may have huge amounts of data,” says Coley. He notes that smaller charities probably have the bigger challenge here, whether they’re working across borders or not.
“This risk is particularly difficult for smaller charities to take into account because they have limited resources,” he explains.
Whatever the size of the organisation, he says, charities should be looking at what their culture is for managing and protecting data, as well as the process for sharing data with others.
“It’s first of all about reviewing, and being clear about, what security measures you have in place. Understand where the vulnerabilities lie, and then make that strategic decision about investment and protection,” says Coley.
5. Failure of national governance
If your charity is operating in a country experiencing a failure of national governance, you may see an impact in terms of how well you are able to operate within that country – existing agreements could be jeopardised or the level of danger could increase, depending on the exact circumstances. Equally, there could suddenly be more people in need of your services.
But even if you’re not operating in a country undergoing such a crisis, you could feel the effects of, for example, a changed economic situation or your own government’s relationship with that country and how that influences national decisions.
“Here, think about how you might be at the mercy of political decisions at both a global and a national level,” says Coley. “There could be a link to interstate conflict here, but also remember that the decisions taken by governments based on what’s going on in the world may have a direct or indirect effect on you.
“If there is economic uncertainty at a broader level, is this going to put more strain on your finances? It’s also worth being aware of supply chains. You may be relying on something that’s made or developed in another country that is suffering from some sort of crisis.”
It’s this link between the micro and the macro, the local and the global, that is really what charities should be thinking about in relation to all the above risk areas.
Tucker says: “Given today’s funding and resource challenges, charities cannot afford to do anything other than think across their whole organisation to identify their whole risk profile and effectively manage it. The wider industries in which we all operate can have negative impacts where you may least expect it.”
Seek to embed risk management processes in both the day-to-day running of your organisation and your continuity planning. With today’s charities playing an important role in the well-being of societies around the globe, building thinking about large-scale challenges into your strategy has never been more important.
The Zurich risk guides
We have produced a series of tailored, easy-to-follow guides to make insurance and risk management in the charity sector easier to understand. The aim is to make this subject simple and, where possible, remove barriers to activities so that the efforts and pursuits of community and social organisations are not hindered.
We know your communities and customers must come first, and our ethos is that insurance is there to facilitate the customers being innovative and taking risks in a managed way. For more information please click here:
- Understanding the impact of emerging risks
- Future proof: ensuring the sustainability of your charity
- Charity regulation and what it means for your organisation
- A fresh look at reputation risks for charities
- Understanding the impact of cyber and information risk
- Planning for and dealing with major incidents
- People power: why trustees, staff, volunteers and donors matter