Nonprofit board members have a fiduciary duty and a duty of care to protect the nonprofit they serve. They can face personal liability for breach of duty or failing to protect the nonprofit from risk. While all nonprofit board members should be covered by Directors and Officers insurance, they should also take steps to manage and minimize risk.

Form a Risk Management Committee

Risk management should be a primary board activity, and even the responsibility of a committee. The committee will perform regular assessments of nonprofit board risks, develop a risk management plan, and implement risk avoidance policies and procedures. The committee will continually monitor and improve risk policies and procedures.

Educate Board Members on Risk Avoidance

Putting risk avoidance policies and procedures in place can go a long way in minimizing nonprofit board risks. Still, board members must also be educated on risk avoidance.

The risk management committee should conduct an annual board orientation to refresh and update all board members on potential liabilities and risk management policies and procedures for risk avoidance. Be sure to record in the minutes that board members attended a risk avoidance orientation.

While D&O insurance offers nonprofit board members some protection from liability claims, risk prevention can significantly minimize the occurrence of such claims.